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By Michael Schuman Monday, Apr. 06, 2009
I got an unexpected lesson in the power of the U.S. dollar during a visit to Tashkent, the dreary capital of Uzbekistan, several years back. While heading into town from the airport, my babbling taxi driver kept one hand (barely) on the steering wheel while his other shoved a stack of local currency, the som, into my face, as he insistently urged me to trade them for dollars. After checking in at the grim Hotel Uzbekistan, a nattily clad porter showed me and my wife to a room, fiddled with a broken TV set, and then reached into his jacket pockets for large bricks of som. He, too, persistently begged me for greenbacks. In Uzbekistan, the dollar ruled.
So it has been throughout the world, from North Korean souvenir shops to Ethiopian bazaars, for the past six decades. Government officials measure the health of national economies by how many dollars are stashed away in their central bank vaults. The international prices of everything from crude oil to cocoa beans are denominated in dollars. The dollar is a universal medium of exchange, because it is liquid, readily available, and backed by the largest economy in the world. There has been little reason for global commerce to function any other way. (See pictures of the global financial crisis.)