The euro as a reserve currency: a challenge to the pre-eminence of the US dollar?

We analyze prospects for the Chinese renminbi to become a major international currency, along with the US dollar, in a multiple reserve currency world. Analytical models on switching costs in networks and on currency choice under direct and indirect transaction costs are used to derive variables for empirical analysis. While network size and financial market depth (lower transaction costs) favor incumbents, changes in trade-related bargaining power and in currency volatility could favor newcomers. The models also point to political determinants affecting currency choice. We develop indices to quantify some of these. When the bargaining power index is used in estimation, it shows capital account openness and currency stability have to complement a rise in trade share for an aspiring reserve currency.

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The Uncertain Future of the US Dollar as the Global Reserve Currency

SSRN Electronic Journal ◽

10.2139/ssrn.2222784 ◽

2013 ◽

Author(s):

Thomas E. Vass

Keyword(s):

Reserve Currency ◽

The Us ◽

Us Dollar ◽

Uncertain Future

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Renminbi Joins International Monetary Fund’s Special Drawing Rights Basket: Rationale and Significance

East Asian Policy ◽

10.1142/s1793930517000289 ◽

2017 ◽

Vol 09 (03) ◽

pp. 76-84

Author(s):

Jing WAN

Keyword(s):

Policy Coordination ◽

International Reserve ◽

Reserve Currency ◽

Special Drawing ◽

The Us ◽

Push Forward ◽

Us Dollar ◽

The 2008 Financial Crisis ◽

Special Drawing Rights ◽

The International Monetary Fund

After the 2008 financial crisis, the International Monetary Fund realises that reforms are needed to reduce the reliance on the US dollar as the only international reserve currency. It began to nurture super-sovereign reserve money where SDR (Special Drawing Rights) is the most favourable candidate. Joining SDR will push forward China’s exchange rate reform to meet the standard of a real international reserve currency, which requires more skilful domestic and international policy coordination.

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The Official Use of International Currencies – Assessments and Implications

Studies in Business and Economics ◽

10.1515/sbe-2015-0037 ◽

2015 ◽

Vol 10 (3) ◽

pp. 71-80

Author(s):

Ramona Orăștean

Keyword(s):

Exchange Rate ◽

Euro Area ◽

Central Banks ◽

Eurozone Crisis ◽

Foreign Exchange Reserves ◽

Reserve Currency ◽

International Currencies ◽

The Us ◽

Exchange Rate Arrangements ◽

Us Dollar

Abstract The paper analyses the official use of international currencies as reserve currency (store of value) and anchor currency (unit of account). Examining the role as a reserve currency we note that the US dollar is the main reserve currency even if it recorded a decline given the decrease of the value of the US dollar reserve holdings and the gradual diversification of the currencies used. Since 2010, the euro's share decreased continuously may be due to the Eurozone crisis and the euro's depreciation against the US dollar. Then we show that the US dollar dominates as an anchor currency, though it was temporary abandoned during crisis time, having more than a regional dimension. At the same time, the use of the euro in exchange rate arrangements appears mainly in the regions that have close links with the euro area. Over the last few years, we have witnessed a gentle orientation towards a multimonetary world, especially regarding the use of the international currencies as reserve currency given the diversification of the currencies in which central banks understand to hold international reserves and the increasing share of the nontraditional currencies in total foreign exchange reserves.

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Decentralization of the Monetary System As a Way to Move away from the Reserve Currency of the US Dollar

Auditor ◽

10.12737/1998-0701-2021-7-7-43-48 ◽

2021 ◽

pp. 43-48

Author(s):

A. Soltakhanov ◽

D. Sizova ◽

T. Sizova

Keyword(s):

Comparative Analysis ◽

Payment System ◽

Reserve Currency ◽

Advantages And Disadvantages ◽

Monetary System ◽

Russian Economy ◽

The Us ◽

Us Dollar ◽

Further Development

The article presents the main directions of the plan for the de-dollarization of the Russian economy, identifies strategic partners in its implementation. A comparative analysis of the centralized and decentralized payment system is carried out. The advantages and disadvantages of the decentralization of the monetary system are emphasized, the trends of its development in Russia are determined. The perspectives of decentralization of the monetary system as a way of abandoning the reserve currency - the US dollar - are analyzed. Proposals are formulated for the further development of the decentralization of the monetary system in Russia.

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Renminbi and Rouble in the Central Asia Economies

Russia and New States of Eurasia ◽

10.20542/2073-4786-2020-4-87-102 ◽

2020 ◽

pp. 87-102

Author(s):

A. Polivach

Keyword(s):

Central Asia ◽

Small Scale ◽

Reserve Currency ◽

Capital Movements ◽

Eurasian Economic Union ◽

The Us ◽

Us Dollar ◽

Economic Union ◽

Commercial Loans ◽

Near Future

This article reviews usage of Russian and Chinese currencies in the economies of the five Central Asia countries (CA5) – for trade payments, intergovernmental and commercial loans and also in the official foreign exchange reserves. Information on these matters, unfortunately, is non-regular and very fragmented. However, based on the analysis of available data the author makes the following conclusions. Both the Renminbi and the Rouble are used in the CA5 economies in small scale, while the US Dollar absolutely dominates. Currently the Rouble is more popular than the Renminbi. It is especially visible in those countries, which are the members of the Eurasian Economic Union. Most likely relationship between the US Dollar, the Rouble and the Renminbi in the CA5 economies will not significantly change in the near future. However the usage of the Renminbi may substantially increase, if China removes all restrictions for trans-border capital movements. Also the usage of the Rouble may significantly increase, if Russia takes actions transforming its currency into a regional reserve currency.

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