The Triffin Paradox

In the early 1960s, Robert Triffin pointed out a contradiction that arises if the currency of only one state is used for international settlements and national currency reserves. It can be formulated as follows:

In order to provide the central banks of other countries with the necessary amount of dollars for the formation of national currency reserves, it is necessary that the balance of payments deficit is constantly observed in the USA. But a deficit in the balance of payments undermines confidence in the dollar and reduces its value as a reserve asset, so a surplus in the balance of payments is required to strengthen confidence. ^{[1] [2]}

Subsequently, this contradiction was called the Triffin dilemma ( Eng. Triffin Dilemma ).

The Triffin Paradox is usually associated with the crisis of the Bretton Woods system .

To resolve this contradiction, Triffin proposed creating a special international currency that would not be tied to gold or some kind of national currency. ^[1] In 1969, the International Monetary Fund began issuing an artificial payment instrument, Special Drawing Rights .