Abstract
This article uses the dynamic analysis of the small country open economic framework (Obstfeld and Rogoff) to establish a basic supply and demand model of two countries, which solves the stable condition that the international reserve currency reaches the balance. The equilibrium stability condition of reserve currency is that the solvency growth rate of reserve currency countries is not lower than the real yield of reserve currency and the actual output growth rate of the non-reserve currency countries, while the reserve currency countries should have larger economic volume. The test of the Bretton Woods system and the contemporary international reserve currency system with stable conditions shows that the Bretton Woods system and the contemporary international reserve monetary system do not meet the stability conditions.
Highlights
IntroductionIn the International monetary system, reserve currency plays a basic function of Exchange media, accounting unit and value storage (Truman,1999), which directly affects the monetary relationship between the currencies of the International monetary system, Exchange rate arrangement and balance of payments adjustment mechanism, so the international reserve monetary system has become the system foundation of the International monetary system, and its stability has pretty important significance to the stability of the world economy, trade and political
In the International monetary system, reserve currency plays a basic function of Exchange media, accounting unit and value storage (Truman,1999), which directly affects the monetary relationship between the currencies of the International monetary system, Exchange rate arrangement and balance of payments adjustment mechanism, so the international reserve monetary system has become the system foundation of the International monetary system, and its stability has pretty important significance to the stability of the world economy, trade and political.International reserve currency experienced from the gold, silver and other commodity currencies to today's dollar-oriented credit currency, each time the change means violent turbulence of the international monetary system
We studied the stability of reserve currencies using the open economic dynamic analysis framework of small countries with Obstfeld and Rogoff(1996)
Summary
In the International monetary system, reserve currency plays a basic function of Exchange media, accounting unit and value storage (Truman,1999), which directly affects the monetary relationship between the currencies of the International monetary system, Exchange rate arrangement and balance of payments adjustment mechanism, so the international reserve monetary system has become the system foundation of the International monetary system, and its stability has pretty important significance to the stability of the world economy, trade and political. The collapse of the Bretton Woods system has proclaimed the end of the era of the gold-dominated reserve currency system, and the international reserve currency system experienced a tumultuous times since the 1980s to today's subprime crisis, and each of these upheaval has brought huge economic losses to the world. This article uses the small country open economic dynamic analysis framework of the Obstfeld and Rogoff to establish a basic supply and demand model for the international reserve currencies of the two countries, and to solve the stability conditions of supply and demand balance. The stability conditions of the Bretton Woods system and the post-Bretton International reserve currency system were tested
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