Is the Chinese yuan going to replace the US dollar as the top international currency?

2021 ◽  
Author(s):  
Enes Özcan
Keyword(s):  
International Currency ◽  
The Us ◽  
Us Dollar ◽  
Chinese Yuan

scholarly journals (DE)STABILIZING EXCHANGE RATE STRATEGIES IN EAST ASIAN MONETARY AND ECONOMIC INTEGRATION

2016 ◽  
Vol 61 (02) ◽  
pp. 1640021 ◽  
Author(s):  
GUNTHER SCHNABL ◽  
KRISTINA SPANTIG
Keyword(s):  
Exchange Rate ◽  
East Asia ◽  
East Asian ◽  
Monetary Integration ◽  
Integration Process ◽  
Currency Exchange ◽  
The Us ◽  
Us Dollar ◽  
Japanese Yen ◽  
Chinese Yuan

The East Asian monetary integration process is at the crossroads. Given very benign liquidity conditions in the US, the prevailing common US dollar peg has contributed to growing macroeconomic and financial instability in the region. This has sparked demands to embark on an independent monetary integration process in East Asia. The paper shows that, however, neither the Japanese yen nor the Chinese yuan can challenge the US dollar as anchor currency in the region. Large fluctuations of the Japanese yen against the US dollar have undermined the potential of the Japanese yen to become a regional anchor currency. Exchange rate stability of the Chinese yuan against the US dollar has enhanced intra-regional exchange rate stability and growth, stressing the potential of the Chinese yuan to emerge as a regional anchor currency. Yet, it is shown that underdeveloped Chinese capital markets and financial repression originating in US low interest rate policies constitute an insurmountable impediment for the Chinese yuan to gain anchor currency status in East Asia. Empirical estimations provide evidence in favor of positive growth effects of the exchange rate stability against the US dollar in East Asia.

Exchange rate persistence of the Chinese yuan against the US dollar in the NDF market

2015 ◽  
Vol 51 (4) ◽  
pp. 1399-1414 ◽  
Author(s):  
Carlos P. Barros ◽  
Luis A. Gil-Alana ◽  
Zhongfei Chen
Keyword(s):  
Exchange Rate ◽  
The Us ◽  
Us Dollar ◽  
Chinese Yuan

scholarly journals THE IMPACT OF THE RENMINBI INTERNATIONALIZATION ON THE GLOBAL MONETARY ORDER

2019 ◽  
Vol 1 (2) ◽  
pp. 13-30
Author(s):  
Katarzyna Twarowska
Keyword(s):  
Foreign Exchange ◽  
International Monetary System ◽  
International Currency ◽  
Monetary System ◽  
International Money ◽  
The Us ◽  
Us Dollar ◽  
The Stability ◽  
The Impact ◽  
Research Analysis

Background and the purpose: The Chinese economy is the fastest growing and changing economy in the modern world. The importance of the renminbi as an international currency is not relevant to China's economic potential and role in the global economy, however, many scientific studies indicate that the position of that currency in the functions of international money will become stronger in the future. This encouraged the author to assess the consequences of the renminbi internationalisation, in particular the impact on the stability of the international monetary system. An additional aim of the paper is to present the possible scenarios for reform of the international monetary system and assess whether the Chinese currency has a chance to become a global currency. Methods: The assessment of the renminbi’s role in global foreign exchange relations was carried out by analysing the use of Chinese currency in the main functions of international money in official sector (reserve currency, intervention currency, anchor currency) and private sector (investment currency, vehicle currency in international trade and on the foreign exchange market, invoicing and quotation currency) using the Cohen matrix. The author also assessed the benefits for the stability of the international monetary system, resulting from the transition from a system based on the dominance of the US dollar to a multi-currency system, including the renminbi. The study included theoretical research (analysis of the literature and research reports) and empirical research (analysis of statistical data). Results and conclusions: The author confirmed the research hypothesis: An increase in the use of renminbi in the functions of international currency will increase the stability of the international monetary system by reducing the dependence of this system on the single currency, which is the US dollar.

scholarly journals What Determines Utility of International Currencies?

2019 ◽  
Vol 12 (1) ◽  
pp. 10 ◽  
Author(s):  
Eiji Ogawa ◽  
Makoto Muto
Keyword(s):  
Time Series ◽  
Generalized Method Of Moments ◽  
Dynamic Panel Data ◽  
Liquidity Premium ◽  
International Currency ◽  
International Currencies ◽  
The Us ◽  
Us Dollar ◽  
Japanese Yen ◽  
The Impact

In previous studies, we estimated a time series of coefficients on five international currencies (the US dollar, the euro, the Japanese yen, the British pound, and the Swiss franc) in a utility function. We call the coefficients utilities of international currencies. The time series show that the utility of the US dollar as an international currency has remained in the first position in the changing international monetary system despite of the fact that the euro was created as a single common currency for European countries. On one hand, the utility of the Japanese yen has been declining as an international currency. In this paper, we investigate what determines the utility of international currencies. We use a dynamic panel data model to analyze the issue with Generalized Method of Moments (GMM). Specifically, liquidity shortage in terms of an international currency means that it is inconvenient for economic agents to use the relevant currency for international economic transactions. In other words, liquidity shortages might reduce the utility of an international currency. In this analysis we focus on liquidity premium which represents a liquidity shortage in terms of an international currency. Our empirical results showed not only inertia in terms of change but also the impact of a liquidity shortage in an international currency on the utility of the relevant international currency.

scholarly journals The influence of economic crisis on the international position of the euro

2014 ◽  
pp. 51-70
Author(s):  
Izabela Zawiślińska
Keyword(s):  
Economic Crisis ◽  
Euro Area ◽  
International Monetary System ◽  
Real Economy ◽  
International Context ◽  
International Currency ◽  
Monetary System ◽  
The Us ◽  
Us Dollar ◽  
The Right

The international position of a currency is directly determined by the scale and manner of fulfilment of classic currency functions in the international context. Creation of the Economic and Monetary Union and the introduction of a new currency (euro) – even though the decision was strictly political – was well-received by entities of contemporary international economy, including its main participants and the players on the international currency market. The reason for such a reception was the potential of the economies in the euro area, and also structural conditions and expectations for creation of an international currency that was to be a real alternative to the US dollar. The possibility of diversification in the investment and reserve spheres as well as in reference, intervention, transfer and invoicing spheres was considered as a step in the right direction to limiting the domination of the US dollar on the market. Notwithstanding the increasing problems in euro area in the fiscal sphere and the real economy, particularly with the job market, one may agree that the latest economic crisis did not change the bipolar character of the international monetary system still based on the US dollar and the euro. However, it needs to be stressed that the euro remains rather a regional than a global currency.

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