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The dollar’s continued fall will pose a serious threat to the multilateral trading system, and the absence of a globally viable alternative means the United States bears an enormous responsibility to maintain confidence in the currency, a senior U.S. economist warned at a seminar in Tokyo.

A modest depreciation might provide short-term relief to America’s current account deficit, but further erosion of global confidence in the dollar could prompt nations to trade bilaterally without dollars, resulting in discriminatory trade, said Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations.

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