LONDON As the dust settles on the global credit crisis, a new world financial order may be emerging - but one possibly more dependent than ever on the United States protecting the dollar's position as dominant reserve currency.
Odd as that may seem against a backdrop of Washington toying with a sovereign debt default, some economists feel there may be few other credible options.
Far from ebbing in importance, they reckon the dollar's role may even have to increase as a necessary home for a swelling "savings glut" fuelled by ageing societies and growing caution among developing nations about foreign capital dependency.
Deutsche Bank strategist Sanjeev Sanyal dubs this latest order 'Bretton Woods III' - the first being the post-World War Two gold standard that ended in 1971 and the second a symbiotic build-up of both U.S. deficits and dollar reserves and bonds by the export-fuelled emerging markets boom between 2000 and 2008.
Sanyal's key point is that a third iteration of these clearly unbalanced but potentially durable international systems is being driven by ageing demographics across the world that will drive savings higher and almost all economies toward surplus.
As age profiles rise and savings grow even in the newer developing countries over the coming decades, the older rich world heading to retirement will not necessarily be dissaving to match, he argues, preferring in many cases to save to excess into retirement as precaution.
But a finite world can't all be in surplus at the same time. Some countries - or one very large one in the shape of a relatively youthful United States - may just have to absorb the excess and continue to run higher deficits in net foreign asset positions for much longer than many have assumed lately.
"We feel that the onus of providing the countervailing deficit will eventually fall on the United States," wrote Sanyal, adding credit market gauges and long-term inflation expectations still show deep-seated faith in the dollar.
If that's sustained, then this 'savings glut' funnelled stateside - first identified by Federal Reserve chief Ben Bernanke in 2005 - will then likely keep U.S. borrowing costs, global investment returns and the dollar exchange rate depressed for many more years to come.
However, if the United States thinks that's untenable or is unwilling to run such large deficits to balance the world, there's a major headache for everyone.
"In some ways, this is analogous to the debate over the debt ceiling," says Sanyal. "In this scenario, world demand may flounder and the savings glut will further depress the real cost of capital."
And this brings us to the anxieties of the moment.
Washington's latest stuttering budget impasse and self-imposed debt cap has left the rest of the world unnerved by the prospect of repeat threats to U.S. credit quality and the role of dollar securities as the safest long-term store of value.
At last count, more than 60 percent of the $11 trillion of world hard currency reserves were estimated to be banked in dollar assets - with the bulk of world commodities and goods trade also denominated in the U.S. currency.
Finance chiefs meeting at the International Monetary Fund's annual gathering last week queued up to warn of the implications of open fiscal warfare in the meeting's host city.
G20 finance ministers and central bankers collectively called for "urgent action" on the stalled budget.
Indian central bank chief Raghuram Rajan warned U.S. default could mean "U.S. collateral is no longer good." Singapore's finance minister Tharman Shanmugaratnam said default would leave a vacuum where "it's not clear where the safe haven is."
The biggest foreign holder of dollars, China, has been most vocal. Vice Finance Minister Zhu Guangyao demanded on Tuesday the United States take "concrete action" to resolve its budget and assume responsibility to uphold global financial stability.
European Central Bank policymaker Ewald Notwotny said it was "extremely dangerous" when the fiscal politics of a country printing the world currency were driven by "very narrow domestic considerations."
So even a postponement of the debt ceiling deadline leaves very high stakes around the globe.
And if the dollar's pivotal role in the evolution of the international system persists, so will the tension.
In a report entitled "Will the U.S. exorbitant privilege destroy itself?", Commerzbank economist Ulrich Leuchtmann said the very nature of the U.S. budget row would damage the dollar.
"U.S. politicians one day might damage the dollar's status as the world's reserve dominant currency, whatever they will do to solve the current crisis."
(Editing by Ruth Pitchford)