“It Is Not Sustainable” | Sylvester Eijffinger on the U.S., the Global Financial Order, and Fuel Prices

Paul Buitink speaks with Sylvester Eijffinger, emeritus professor of financial economics at Tilburg University, about the war in the Middle East, its economic implications for Europe, and the future of the dollar as the world’s reserve currency. How sustainable is the current monetary system? And what roles could the euro, the yuan, and gold play in it?

Eijffinger views the tensions in the Middle East as a direct threat to the global economy. A further escalation around the Strait of Hormuz could lead to higher energy prices, rising inflation, and disruptions in global supply chains. According to him, the consequences for the Netherlands could also be significant, including higher fuel prices and renewed pressure on businesses, the middle class, and households.

They also discuss the position of the United States under Donald Trump. According to Eijffinger, Trump’s policies undermine confidence in the dollar, the rule of law, and the independence of institutions such as the Federal Reserve. In his view, this increasingly puts the foundations of the global reserve currency under strain. How long can the dollar maintain its dominant position?

The conversation also explores potential alternatives. Eijffinger argues that the Chinese yuan faces significant limitations due to the lack of rule of law and free capital movement. For Europe, however, he sees a historic opportunity. If the EU succeeds in further integrating its capital markets, completing the banking union, and cooperating more strategically, the euro could assume a much larger international role.

Finally, they discuss the future of Europe and the Netherlands. Why does the Netherlands continue to disadvantage itself economically with high taxes and sluggish policymaking? And can Europe, in these turbulent times, evolve into a stronger economic and monetary bloc?