Costs and benefits of currency internationalisation: theory and the experience of emerging countries

Orsi, Bianca; Alves, Antônio José Lopes; Modenesi, André de Melo

doi:10.4337/9781802203981.00007

Cited by 2 publications

(2 citation statements)

References 27 publications

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“…Gopinath & Itskhoki, 2021;Gopinath & Stein, 2021) and currency hierarchy (e.g. Andrade & Prates, 2013;Kaltenbrunner, 2015;Orsi, 2019) have highlighted, the US dollar dominance is underpinned by deep structural factors. According to the dominant currency paradigm, network effects and economic size cement the dominant role of the US dollar as an international trade invoice currency.…”

Section: Multiple Cbdc Arrangements: the Answer To The Us Dollar Domi...mentioning

confidence: 99%

Central bank digital currencies and the international payment system: The demise of the US dollar?

Kuehnlenz

Orsi

Kaltenbrunner

2023

Research in International Business and Finance

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Section: Multiple Cbdc Arrangements: the Answer To The Us Dollar Domi...mentioning

confidence: 99%

Central bank digital currencies and the international payment system: The demise of the US dollar?

Kuehnlenz

Orsi

Kaltenbrunner

2023

Research in International Business and Finance

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“…Second, the currencies of the big EMEs, such as the Brazilian Real, the South African ZAR and the Mexican peso, experienced a slight increase, from 0 to 1-2 per cent in the same period. However, in the latter cases, even this small increase is somehow misleading since it does not stem from an increased liquidity premium, but instead reflects the demand for them as speculative assets associated with the greater liquidity and deepness of their foreign exchange derivative markets (Orsi 2019;Ramos 2019).…”

Section: The Concepts Of Currency and Financial Hierarchiesmentioning

confidence: 99%

Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks

Prates,

Fritz,

Paula

2023

European Journal of Economics and Economic Policies Intervention

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This paper seeks to fill a gap in the literature on frontier market economies (FMEs) with the following two research questions: (i) Which are the drivers of FMEs’ integration into financial globalisation? (ii) What explains the greater vulnerability of FMEs compared to emerging market economies (EMEs) to global financial shocks? We argue that the emergence of FMEs as a new group of the financial periphery fills a vacuum left for global investors by the major EMEs, whose spreads declined in the past decade due to high foreign currency reserve accumulation and other EME-related factors. To answer the second question, we introduce the concept of financial hierarchy as a second layer of the currency hierarchy: while the currency hierarchy is organized by the different degrees of liquidity premia currencies offer, in the financial hierarchy, not currencies, but financial assets are placed according to the nominal yield. While FMEs’ currencies have a lower liquidity premium than those of EMEs, the difference between them is not vast – as both are not accepted at the international level – and are insufficient to explain FMEs’ greater vulnerability to external financial shocks. We argue in the paper that this vulnerability stems mainly from the position of FMEs’ at the bottom of the financial hierarchy, which results in a different pattern of international financial integration.

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Costs and benefits of currency internationalisation: theory and the experience of emerging countries

Cited by 2 publications

References 27 publications

Central bank digital currencies and the international payment system: The demise of the US dollar?

Central bank digital currencies and the international payment system: The demise of the US dollar?

Frontier-market economies as a new group of the financial periphery: patterns and transmission channels of global shocks

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