Political determinants of international currencies: What future for the US dollar?

Helleiner, Eric

doi:10.1080/09692290801928731

Cited by 107 publications

(92 citation statements)

References 24 publications

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“…However, these may still not be sufficient. As Helleiner (2008) suggested, confidence and power in a currency may derive not only from economic fundamentals, but also from the social institutions. Further, as Krugman (1984) noted, there is a kind of circular causation encouraging a leading international currency to become even more prominent over time since people find benefits in using a currency that is used by others.…”

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confidence: 99%

Paths to a Reserve Currency: Internationalization of the Renminbi and Its Implications

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. AbstractIn this paper we try to address the question of what could help make the renminbi a reserve currency. In recent years, the authorities in the People's Republic of China (PRC) have made efforts to internationalize its currency through a two-track strategy: promotion of the use of the renminbi in the settlement of cross-border trade and investment, and liberalization of the capital account. We find that if we use only the quantitative measures of the economy, the predicted share of the renminbi in global reserves could reach 12%. However, if institutional and market variables are included, the predicted share comes down to around 2%, which is a more realistic prediction. By reviewing experiences of other reserve currencies, we propose a three-factor approach for the PRC authorities to promote the international role of the renminbi: (i) increasing the opportunities of using renminbi in the international community, which requires relatively rapid growth of the PRC economy and continuous liberalization of trade and investment; (ii) improving the ease of using renminbi, which requires depth, sophistication, and liquidity of financial markets; and (iii) strengthening confidence of using renminbi, which requires more transparent monetary policy making, a more independent legal system, and some political reforms. In general, we believe that the renminbi's international role should increase in the coming years, but it will take a relatively long period before it plays the role of a global reserve currency. JEL Classification: F30, F33, F36, F42

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Paths to a Reserve Currency: Internationalization of the Renminbi and Its Implications

2014

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“…Less and less limited to the political and institutional restrictions created in the postwar period, the increasing flexibility acquired by wealth -when assuming the form of financial assets -has stimulated inter-capitalist competition, accelerated concentration and centralization of capital, and created new opportunities for the transformation of money into more money. In this way, (4) For more details on the determinants of the dollar as an international currency, see De Conti (2011); Helleiner (2008) and Metri (2004). fictitious capital -whose weight in wealth is growing -establishes the parameters of the capital operation as a whole 5 .…”

Section: From the End Of The Bretton Woods Agreement To Financializedmentioning

confidence: 99%

For a political economy of financialization: theory and evidence

et al. 2017

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The end of the Bretton Woods agreement led not only to changes in the international economic relations, but also in the very way in which capitalism functions. The liberalization of capital flows and deregulation and integration of financial markets under US leadership gave rise to a new systemic pattern of wealth, financialization, in which operations with financial assets received increased importance in the management of wealth by households and enterprises, and not only by banks and the other financial market institutions. Unlike most recent interpretations of this phenomenon, this one does not indicate a tendency of the system towards stagnation, but rather an increase in the instability that characterizes it, reinforcing the moments of expansion, contraction, as well as leading to crises. In fact, with the generalization and the dominance of finance, borrowing and spending decisions by enterprises and households are now increasingly responsible for current and expected fluctuations in the stock of wealth, which in turn are responsive to current and expected fluctuations in the prices of financial assets. This implies a transformation in the relationship between the state and the market, with central banks and national treasures becoming hostage to the need to prevent private losses and the perverse effects they may exercise over output, income and employment levels of the economy.Keywords: Financialization; Contemporary capitalism; Economic dynamic; Instability; Inequality. ResumoPor uma economia política da financeirização: teoria e evidências O fim do arranjo de Bretton Woods ensejou não apenas uma mudança na forma de funcionamento das relações econômicas em âmbito mundial, mas também no próprio modo de operação do capitalismo. A liberalização dos fluxos de capitais e a desregulamentação e integração dos mercados financeiros internacionais sob a liderança dos Estados Unidos deu origem a um novo padrão sistêmico de riqueza, a financeirização, em que as operações financeiras ganham importância cada vez maior na gestão de ativos e passivos por parte das famílias e das empresas, e não apenas de instituições do mercado financeiro. Ao contrário do que sugerem interpretações mais recentes sobre esse fenômeno, isso não significa uma tendência do sistema à estagnação, mas um aumento da sua instabilidade característica, reforçando os momentos de expansão, mas também de contração. De fato, com a generalização e a  Article received on April 10, 2017 and approved on September 18, 2017. ** Professors at the Institute of Economics -University of Campinas, Campinas, SP, Brazil. E-mails: bragajcs@uol.com.br; giulianoliveira@gmail.com; alex.wilhans@gmail.com; simonededeos@gmail.com. *** PhD student in Economics at the Institute of Economics -University of Campinas, Campinas, SP, Brazil. E-mail: paulowwolf@gmail.com. dominância da lógica financeira as decisões de endividamento e de gasto das empresas e das famílias passaram a ser crescentemente sensíveis às oscilações correntes e esperadas nos estoques de riqueza,...

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“…And although this typology had in fact been neglected for a long time, Eric Helleiner (2008) has shed new light on it recently, and since then a growing number of political economy studies of international currencies use it, paying particular attention to the top currency and negotiated currency concepts.…”

Section: Political Economy Conceptualizationmentioning

confidence: 99%

The Concepts, Consequences, and Determinants of Currency Internationalization

Chey

2013

SSRN Journal

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The international statuses of currencies shape a fundamental characteristic of the international monetary system, which has significant impacts on the world political economy by affecting the political as well as economic relationships among states. The study of international currencies has been long dominated largely by economists, however, with political economy research in this area quite underdeveloped. However, the 2008/9 global financial crisis, the subsequent European debt crisis and the recent active Chinese promotion of renminbi internationalization have spurred new and considerable interest among political economists on issues surrounding international currencies. Political economy study of international currencies has thus been gradually growing of late, and making notable progress.This study provides a comprehensive and systematic review of the literature on international currencies-covering both political economy and economics-with the primary aim of building a useful groundwork to help develop a better research framework for the political economy study of them. In particular, it discusses the international currency concept, the costs and benefits of international currency issuance, the determinants of currency internationalization, and the future prospects of the current dollar-centered international monetary system. This research in addition highlights a group of important issues that need further investigation by future political economy study of international currencies, by drawing special attention to the following issues: historical events, the political determinants of currency internationalization, government policy strategies, and the consequences of international currency choice.Keywords: Currency internationalization, dollar, euro, international currency, Special Drawing Right, renminbi, yuan 2 I. IntroductionThe international standings of currencies form a principal characteristic of the international monetary order, which shapes the world economic and political system by influencing the economic and political relationships among states. Despite their great impact on the world political economy, however, and with a few notable exceptions, 1 the political economy literature has until recently not paid much attention to the issues surrounding international currencies, and their discussion has as a result been long dominated by economists. Economists initiated extensive debate about the future of the US dollar (hereafter, "the dollar") as the dominant international currency as early as in the late 1960s, when the sustainability of the Bretton Woods system began to be questioned. And disputes among them about the dollar's future as leading international currency have emerged almost any time the dollar has lost substantial value, with particular intensification since launch of the euro in 1999.2 The contrasting low interest in international currencies on the part of political economy scholarship is in fact a bit odd, considering that one of the founding studies for international polit...

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Political determinants of international currencies: What future for the US dollar?

Cited by 107 publications

References 24 publications

Paths to a Reserve Currency: Internationalization of the Renminbi and Its Implications

Paths to a Reserve Currency: Internationalization of the Renminbi and Its Implications

For a political economy of financialization: theory and evidence

The Concepts, Consequences, and Determinants of Currency Internationalization

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