Drawing Rights Research Articles

Effect of Imposed Self-Governance on Irrigation Rules Design among Horticultural Producers in Peri-Urban Kenya

While high urban vegetable demand has driven unprecedented intensification of small private irrigation in peri-urban Kenya, absence of appropriate local governance mechanisms has necessitated interventions by concerned state agencies. Based on Ostrom’s design principles for sustainable commons, this paper evaluates the robustness of the irrigation management regime emanating from involuntary self-governance among peri-urban farmers. Findings show that since conflicts were fueled by water scarcity peaks corresponding with market price peaks, the interventions overemphasized facilitating water sharing among users. With conflicting users viewed as the problem by the agency, their experiences with the resource system, existing social structures, and resource use dynamics causing conflicts were largely ignored in the change process. Consequently, narrowly focused use rules that failed to properly define important resource parameters resulted. Further, user drawing rights have no significant input requirement, monitoring of water resource condition and sanctioning of deviant behavior are overlooked due to a lack of sufficient social capital and commitment to the collective establishment. Although inherent conflicts signify high economic valuation of water access by users, the lack of local ownership of the transition process made the policy interventions fail to produce rules that can guarantee sustainable irrigation development in an environment characterized by intensive irrigation and agrochemicals application, and growing domestic and industrial water demand. Therefore, recognizing water as a commercial input, recognizing conflicting users and their experiences as an essential solution, and integrating them in a participatory manner in subsequent institutional change is deemed necessary for effective governance in the post-conflict setup.

Special Drawing Rights: International Monetary Support for Developing Countries in Times of the COVID-19 Crisis

Abstract A major issuance of special drawing rights (SDRs) through the International Monetary Fund would be a key tool to provide financial support to developing and emerging economies and limit the economic and financial fallout of the COVID-19 crisis. SDRs are an unconditional resource, and the case for such an allocation is very strong during an exogenous shock, such as the current one. An SDR allocation would enhance the international liquidity in the hands of emerging and developing countries, so that public responses to the health crisis are not imperilled by financial crises. Close to two-fifths of a new SDR allocation would directly go to developing and emerging economies. In addition, a new mechanism should be created through which countries that do not need their SDR allocation lend them to the IMF, to increase the Fund’s lending capacity. Developed countries can also allocate the SDRs they do not use for official development assistance.

Russia's Strategic Priorities in the Global Monetary System from the Point of View of Ensuring Foreign Economic Security

The presented study analyzes the reasons for the need to move away from the US dollar (hereinafter referred to as the dollar) as a universal means of payment in international trade based on the existing threats, examines alternative means of international payments, and identifies their benefits and drawbacks in the context of Russia’s economic security.Aim. The study aims to identify and characterize the means of international payments that fall in line with Russia’s strategic priorities from the perspective of economic security.Tasks. The author considers the risks of using the dollar in international payments and reserves, assesses various means of international payments from the perspective of Russia’s strategic interests, and evaluates the possibility of substituting the dollar with alternative means of international payments.Methods. This study analyzes information from the International Economic Forums, statistics of the Central Bank of Russia, Federal State Statistics Service, Decree of the President of the Russian Federation on the economic security strategy of the Russian Federation until 2030, reports of news agencies, and works of Russian and foreign authors on the subject.Results. Based on the results of the conducted study, the author draws several conclusions. Due to many factors, the most important of them being the volume of trade in dollars, the dollar will remain the world’s leading currency in international trade. However, given that de-dollarization is a global process, the existing trends will amplify. A supranational currency is unlikely to appear for a number of reasons. First, the obvious opposition of the United States due to its unwillingness to let go of such a powerful lever of economic well-being and political influence as the use of the dollar as a global means of payment. The US would probably agree to creating a supranational currency in the medium term if the global process of de-dollarization reaches critical values. Second, the financial and trade centers of the euro and renminbi area are likely to focus on developing their own currencies, especially given the growing global GDP and China’s trade. Creating a supranational currency based on the existing structure of the International monetary Fund (hereinafter — the IMF), following the example of Special Drawing Rights (SDR), with the IMF virtually controlled by the United States, will not eliminate the threat of the currency being used as an instrument of political pressure on individual countries. Replacing the dollar with such kind of supranational currency does not serve the interests of Russia’s economic security. A potential alternative involves creating a supranational currency based on a structure that is independent of the IMF. In this case, the obstacles would include the obvious opposition of the US and its allies and the potential influence of the US on the emission of the supranational currency using its foreign political resources to affect the decisions made by other countries. Using national currencies in international trade in the medium term under the influence of globalization would lead to a formation of multiple currency centers. These centers would most likely be the dollar, euro, renminbi, and ruble.Conclusions. The creation of a ruble-based International Monetary Center with the CIS, BRIC countries (except China), and Turkey serves Russia’s strategic interests. Further consolidation around the ruble would require implementing a financial sustainability policy, maintaining the stability of the macroeconomic environment, creating an international bank similar to the IMF with payments made in rubles, strengthening offshore ruble areas, and increasing high-tech exports.

The fourfold relation between the essence of money, inflation, bubbles and debt—A theoretical macrofounded analysis

AbstractThe paper makes an unprecedented claim by identifying a significant relationship between money's (immaterial and intrinsic‐worth‐detached) essence and the measurement of inflation rates, on the one hand, and bubbles and private/public indebtedness, on the other hand. The inflationary potential of cryptocurrencies—among others: xenocurrencies and special drawing rights—is also analysed. Another added value is the consistently macroeconomic approach, which starts from the structural and interconnected mechanisms and then explains economic‐financial crises and their increasingly common features.

Global Economy: New Risks and Leadership Problems

After the global crisis of 2008–2009, the world economy entered the era of restructuring. This article focuses on the risks that a new leader will face in the process of shaping the world economy. The methods employed in the research include big data processing of continuous change and the results of the symmetric macroeconomic analysis based on the statistics collected by the International Monetary Fund (IMF), The Word Bank (WB), Bank for International Settlements (BIS), Central banks and Treasuries. The study results proved that the recessionary processes, their depth and global nature, are caused by a combination of world financial system crises and general civilization problems. These new systemic risks for the world economy might result in new global crises that will limit the resources of international financial institutions for sustainable development. Besides, for most banks these crises will mean shifting a big share of derivatives to the off-balance liabilities, using Special Purpose Vehicle (SPV) in deals, followed by an increase in state and corporate debts, trade wars, a slowdown of economic development in China, and widening contradictions between global and national finances. Regular research and systematization have developed certain guidelines for the global economic restructuring process. First of all, it is recommended on the base of interstate compromises to focus on international agreements to ensure a solid foundation for global finance. On the basis of the comparative analysis carried out for the USA, China and other counties, it was made clear that no one leader in world economy in 21st century views the world reserve as based on the currency of one country only. Instead, there will be a slow transition to using Special Drawing Rights (SDR) with a basket from 15–20 currencies G20.

How do dynamic responses of exchange rates to oil price shocks co-move? From a time-varying perspective

With globalization and financialization, exchange rates could be sensitive to oil price shocks. Due to differences of exchange rate policy, oil-dependence status, and other factors, the responses of exchange rates to oil price shocks could be either similar or heterogeneous. Therefore, in this paper, we integrate a hybrid research framework to investigate the co-movement of responses to oil price shocks of four major exchange rate of currencies included in the Special Drawing Rights basket from January 2000 to September 2018 from a time varying aspect and considering the asymmetric effect of the oil price shocks. The main results are as follows, compared with the general oil price shocks, unexpected oil price shocks could have greater influence on currency markets over time, with the asymmetric effect happening only when extreme market situations and unexpected oil price shocks appear simultaneously; pairwise exchange rates tend to move in either a negatively or a positively similar way, rather than in an unrelated manner; in 50% of the sampled market time, the co-movement situation of exchange rates' response could be captured by specific small numbers of co-movement modes, with the Euro/US dollar (USD) and Great British Pound/USD tending to co-move in more stable manner and having the potential to serve as an early warning of risk, while other pairwise exchange rates are characterized by time varying features.

A global stablecoin: Revolutionary reserve asset or reinventing the wheel?

Since early 2019, when Facebook announced its intention to design a payment system based on blockchain technology, the global financial regulatory establishment has begun to take seriously the arguments for disintermediated payment systems. This paper examines the geopolitics, legal concepts and monetary policy that have informed the emergence of ‘global stablecoins’ such as Facebook’s Libra project, central bank digital currencies and the single hegemonic currency (SHC) recently proposed by Mark Carney of the Bank of England. It first analyses private and state-backed cryptocurrencies, and suggests that state-backed cryptocurrencies are more likely to fit the role of true digital currencies. Focusing on the distinctions between central bank digital currencies on a national level and the proposed SHC as a new global reserve asset, the paper sets out the legal structure of the SHC based on the ‘claims’ model, but infers from its similarities to special drawing rights that the full development of such an asset would be opposed by domestic policy interests. Finally, the paper assesses the prospects of the SHC based on the ‘objects’ model. It tentatively concludes that the features of the objects model that distinguish it from the claims model greatly improve its prospects of success. Specifically, the generation of network effect value, as a substitute for the convertibility value of special drawing rights, may be the decisive contribution of blockchain technology to a truly global reserve currency.

Research on key technologies of deduction of multinational power trading in the context of Global Energy Interconnection

When transnationalized electricity trade is conducted in the context of Global Energy Interconnection (GEI), the transaction settlement usually has a long cycle and high cost and is influenced by the volatility of the exchange rate. It is thus necessary to overcome the problems associated with the transaction settlement, change in the trading model data, and trading strategy in the transnational transaction deduction. To overcome the problem of trade settlement, this paper proposes the use of a digital currency (energy currency) for the cross-border electricity trading settlement based on the special drawing rights of the International Monetary Fund, which is controlled by the Global Energy Interconnection Development and Cooperation Organization (GEIDCO), to enable the proposed currency to become a stable digital currency. The traders can use the energy coins as a unit of currency for quotes, combined with the data pertaining to the changes in the energy information obtained from the GEI framework and data regarding the optimally extrapolated reference trading indicators. To realize the implementation of the multi-trader concurrent transaction deduction using a microservice architecture, this paper proposes a method of computing the microservice and synchronous interaction among the traders, based on the database table data, because the large amount of computation is required to be accomplished asynchronously with a single process. The key technology behind these cross-national electricity trading simulations can not only enable the GEI transnational traders to performed daily real-time trading, but it also demonstrates the advantages of the rapid settlement of the energy currency and the realization of a stable payment in the global energy interconnection cross-border electricity trading.

A Global Stablecoin: Revolutionary Reserve Asset or Reinventing the Wheel?

This article examines the geopolitics, legal nuances and monetary policy which inform Carney's proposal. Part I sets out the application of block-chain technology in the context of payment systems, and discusses the geopolitics of Libra and the shift in focus to Central Bank Digital Currencies ('CBDCs'). It suggests that state-backed cryptocurrencies are more likely than their private sector counterparts to fit the role of true digital currencies, at least on a domestic level. Part II explains the legal distinctions between the cryptocurrency models proposed by Facebook and others, and CBDCs. The former fulfils the main functions of money by granting a claim to the holder, whereas the latter does so as an 'object' of monetary policy. A Global Stablecoin ('GSC') such as the SHC does not necessarily fall into either camp, but its success as a global reserve currency may hinge upon the fine details of its legal construction. In Part III, one conception of the SHC, based on the 'claims model' is set out. Whilst the use of block-chain technology is undoubtedly novel, there are significant similarities between this version of the SHC and previously rejected reforms to the 'Special Drawing Rights' (SDR) allocated by the International Monetary Fund ('IMF'). It is argued that the extent of the similarities indicates that the claims model is likely to face the same hurdles which stymied the campaign to develop the SDRs into a global reserve currency. This begs the question, however, of why Carney would propose the SHC if the odds in monetary policy were already so firmly stacked against it. Part IV considers the 'objects model' as applied to a SHC. It tentatively concludes that the features of the objects model which distinguish it from the claims model greatly improve its prospects of success. Specifically, the generation of network effect value, as a substitute for the convertibility value of SDRs, may be the decisive contribution of block-chain technology to a truly international currency. The article concludes that a claims-based SHC would, to a great extent, be an attempt to reinvent SDRs in a digital age, and that the advantages of block-chain technology will be insufficient to surmount well-established US monetary policy. The objects model, whilst more ambitious in some respects, constitutes a radically novel proposal which may, for that reason amongst others, gain global traction.

The promise of China’s free trade zones – the case of Hainan

PurposeThis paper is submitted for a special issue of Asian Education and Development Studies on the topic of Greater China Development. The purpose of this paper is to explore the challenges and opportunities of developing a free trade zone (FTZ)/free port in China’s Hainan island.Design/methodology/approachHainan is to be Mainland China’s newest and largest FTZ. However, the experience of the existing Mainland FTZs is not encouraging, their limited, piecemeal reforms attracting little interest from foreign investors. To make a difference and provide a new engine of growth for the Mainland economy, the approach for Hainan needs to be much bolder. Hainan should aim to develop as a free port, a services centre and a financial centre.FindingsRegarding the financial sector development, the opportunity should be taken to experiment with special drawing rights. Hong Kong can provide the exemplar and expertise to jump-start Hainan’s development. To provide critical mass, mutual access should be opened between Hainan and the nine Mainland municipalities of the Greater Bay Area. An inner border will be needed to distinguish the experimental area from the rest of the Mainland, and an outer border to preserve its integrity vis-à-vis the international environment.Originality/valueIf Hainan can be developed into the China Offshore Centre, it would have the potential to restart the Mainland’s stalled reform process, and to relieve international trade and financial tensions.

Cryptocurrency value changes in response to national elections: do they behave like money or commodities?

ABSTRACT This study examines changes in the value of Bitcoin after the BREXIT and US Presidential elections in 2016 to determine whether it and other cryptocurrencies experienced value changes associated with the vote outcomes. For comparative purposes, Bitcoin is also compared to currencies such as the Great Britain Pound, Mexican Peso and Special Drawing Rights to determine whether Bitcoin values change like currencies. Some evidence showed changes in the value of Bitcoin were weakly similar to store-of-wealth commodities like gold and silver. Overall, the election-window volatility of cryptocurrencies was much higher than the preceding one-year average for the BREXIT vote but less volatile than the one-year average for the US election vote.

China and the SDR: Financial Liberalization through the Back Door

We analyze the motives for China’s campaign to secure the addition of its currency, the renminbi, to the basket of currencies comprising the International Monetary Fund’s Special Drawing Rights. Our argument is that the campaign to add the renminbi to the SDR basket was not just a vanity project; it was a strategy used by the advocates of financial liberalization in China to force the pace of reform. It was also a strategy with significant risks.

The Impact of "Belt and Road" Initiative on the Internationalization of Chinese Renminbi

President Xi proposed building the Silk Road Economic Belt and 21st-Century Maritime Silk Road, which became known as the “Belt and Road” Initiative. In 2016, the RMB (Chinese currency) officially joined the SDR (Special Drawing Rights), and the RMB’s entry is the integration of the Chinese economy into the global financial system. The internationalization of the RMB is the need for the development of global economic integration and the development of China’s international trade. This “initiative” provides strong support for the internationalization of the RMB. Besides, how to achieve balance in maintaining the country’s economic stability and promoting currency internationalization has always been a difficult issue faced by Chinese monetary authorities when the issue of “big country with small currency” presented. Based on the theory of internationalization of currency, this paper discusses the mutual promotion between RMB's internationalization and the "Belt and Road" initiative, the role of the "Belt and Road" Initiative as a driving force to RMB’s Internationalization.

China and Special Drawing Rights—Towards a Better International Monetary System

China and the international monetary system need each other. The international monetary system is strained, with crisis just around the corner, yet reform is not on anyone’s agenda. Meanwhile China, deeply invested in the current system, faces narrowing options as trading partners question its moves abroad, debt levels rise at home, and its current account moves from surplus to deficit. RMB internationalization might appear to provide a way out, but the policy has its limits and tends to exacerbate rather than relieve tensions. We argue that a tension-reducing solution is at hand to the problems of both the international monetary system and China—IMF-style Special Drawing Rights (SDRs). If in a unilateral initiative China were to make the SDR central to its next phase of capital account opening, China’s institutions, corporates and individuals—presently restricted in their access to international currency—would likely embrace it. Begun by China, with support from the international community and Hong Kong, promulgation of the SDR would usher in an era of lower tensions, providing space for development and avoidance of conflict within a reordered monetary system in which China would have a more prominent role.

Recent Developments in the Republic of Korea’s Space Policy: An Overview of Space Activities and National Laws

Like other leading space-faring countries, the Republic of Korea (hereinafter referred to as ‘Korea’) has initiated its space programmes mainly via government-led research and development. Although Korea started its space development programme much later than other space-faring countries, it seems to have made remarkable progress in a relatively short period of time, including the development of satellites using indigenous space technologies, the Korea Space Launch Vehicles (KSLV-I, II) and the Korean space centre (Naro Space Centre). With regard to the national space legislation, the Korean space Acts seem to implement most of the elements recommended by the UN General Assembly. However, for a better development of space law and policy in Korea, it would be desirable if the following suggestions were taken into consideration: firstly, the scope of space activities that require a licence needs to be expanded; secondly, Special Drawing Rights (SDRs) should be used instead of Korean won; thirdly, the Korea Aerospace Research Institute (KARI) needs to have the status of a national space agency; and finally, the Korean government needs to invest more in space projects and actively foster the careers of future space professionals.

On the Bailout of Currencies

Special Drawing Rights are reserve assets which ought to provide liquidity in times of a country’s financial distress. It is a potential claim on freely usable currencies of International Monetary Fund member countries. This article examines the possible effects of a global Special Drawing Rights implementation by the International Monetary Fund in case of a collapse of one of the major currencies. The question addressed is if a distressed fiat currency can be bailed out effectively by triggering the designation mechanism to the International Monetary Fund member countries The results indicate that the liquidity benefit per created Special Drawing Rights unit would proportionally increase with the rate of money supply.

Ima li izgleda da Juan bude nova svetska rezervna valuta?

China has long been the world's second largest economy, with the largest foreign exchange reserves and the second largest share in world trade. However, its position in the global economy has long been recognized, but this recognition has not been accompanied by the international monetary significance of the yuan. Despite China's economic significance, the political importance and the voting power in the International Monetary Fund (IMF) cannot be compared to that of the U.S. because the U.S. has over 17% of the votes, whereas China has 3.8 %. Owing to that, the U.S., together with its allies, gets to block decisions and tailor global economic policy. Striving to establish the world's reserve currency, China has been leading comprehensive economic and trade policies while strengthening the yuan convertibility. As a result, effective October 1, 2016, the yuan has become a reserve currency in the basket of special drawing rights along with the dollar, the euro, the yen, and the British pound. China has been supporting the IMF reform while establishing new institutions aimed at redefining the current international policy under the strong influence of the U.S. The paper analyses the channels of Chinese authorities' actions and the prospect of recomposing the international monetary system and reducing the global U.S. influence, with the aim of identifying whether it is likely that the Chinese currency will obtain the status of the world currency.

China’s exchange rate regimes revisited and bubble detection in 2005-2015

The International Monetary Fund’s decision in 2015 to add the Renminbi to its Special Drawing Rights currency basket has in effect granted the Chinese Yuan the international reserve currency status. This study revisits China’s five exchange rate regimes in 2005-2015 and investigates the relationships among the currencies of the Chinese Yuan, the U.S. Dollar and the Euro. The Log-Periodic Power Law Singularity model is proposed as a generic parameterization to capture the super-exponential behavior in the tetrad of exchange rates of these currency pairs. The transient non-sustainable faster-than-exponential acceleration of the “CNY against USD” from August 2005 to July 2008 suggests the existence of an apparent bubble with an under-valuation. The clustered signals of LPPLS Confidence indicators for the “CNY against USD” from May 2011 to March 2012 suggest the termination of its long-term growth. The signals for the “EUR against USD” and “CNY against EUR” emerging from January 2014 to August 2015 show a tightly coupled relationship among these currency pairs. Moreover, the empirical estimates of the most possible critical time by the standard Ordinary Least Squares method and the Quantile Regression method for the time series of “CNY against USD” tends to be later than that of “CNY against EUR” in the five regimes.

Enhanced Special Drawing Rights: How China Could Contribute to a Reformed International Monetary Architecture

AbstractSince the end of the Bretton Woods era, the world has operated on a de facto system of free‐floating exchange rates, with the US dollar as the dominant international currency. The system, characterized by large pro‐cyclical capital flows and chronic imbalances, is inherently unstable, and has contributed to repeated crises, recessions and geopolitical tensions. One potentially “least‐difficult” line of reform would be to allow the evolution of a multi‐currency system, underpinned by an expanded role for Special Drawing Rights (SDRs). Attempts to promote wider use of the SDR have foundered on the liquidity premium. However, for Chinese corporations and institutions, at present restricted in their capital account activities, the SDR liquidity premium would appear less daunting. The Chinese authorities could provide policy encouragement for the use of SDRs by their institutions. This initiative, supported by China's Special Administrative Region Hong Kong, would kick‐start an international SDR ecosystem, and encourage even broader use of SDRs, to the benefit of international monetary stability.

Controlled Currency Regime and Pricing of Exchange Rate Risk: Evidence From China

Extant research finds that exchange rate pegs do little to reduce firms’ exposure to exchange rate risk in emerging markets. We study whether exchange rate risk exposures under a pegged/controlled floating currency regime can be priced in asset returns using unique data on exchange rate regime changes in China. As the only currency in the basket of International Monetary Fund’s (IMF) Special Drawing Rights that is not fully market-driven for its exchange rate formation, the Chinese RMB (renminbi) offers an ideal case to study the pricing of exchange rate risk in pegged and controlled floating regimes. We find a negative stock market reaction to the announcement of changes from a pegged exchange rate to a controlled floating regime, suggesting a negative stock valuation effect of expectation of increased exchange rate exposure to currency appreciation. Under the managed floating exchange rate regime, the volatilities of accounting performance measures are significantly greater for the companies with stronger exposure to foreign-exchange rate risk. More importantly, foreign-exchange rate risk is priced in equity returns under the controlled floating regime but not under the strictly pegged regime. Furthermore, the pricing is stronger for firms with higher sensitivity to economic channels transmitting the exchange rate risk exposure to risk premiums. Overall, our results suggest that currency hedging for a multinational corporation with foreign-exchange exposure is warranted under a controlled floating currency regime.