In a market-based financial system, developing business cases and determining the cost and source of capital and the viability of competitors are relatively straightforward activities. However, the ability to do competitive analysis and to assess how competitors are financed will become more difficult as a result of the depreciation of the U.S. Dollar. Market entry and exit strategies will change as companies try to figure out who’s really behind their competition. Businesses never had to worry about the dealings of high finance as long as capital was freely available and capital markets fairly transparent, but the end of U.S. Dollar dominance will have a greater impact on businesses than simply currency risk. Following the money in this new world of high finance will be more important than ever.
The Background
The collapse of Lehman Brothers may prove to have been the pivotal moment in the U.S. Dollar’s long history as the world’s reserve currency. While insiders may have shared rumors about the Dollar’s problems for some time, many investors in Dollar-denominated assets were caught by surprise in the financial panic that ensued in the Fall of 2008. Ironically, as it turned out, the global financial panic briefly revived the Dollar’s role as the world’s premier currency.
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