International Currency Research Articles

The Different Impacts of a Strong Dollar on Developed and Emerging Market Economies

The US dollar index has continued to rise and has reached its highest level since 2022. Based on the US dollar's status as the dominant international currency, this round of the dollar's significant and rapid appreciation has a significant impact on the global economic and financial situation. This study aims to examine how this round of dollar appreciation affects the major global economies and the extent of its impact. This paper analyzes the impact of a strong dollar on emerging economies and non-US developed economies and draws a comparison between the two impacts. The findings of this study reveal that the negative impact of the current round of strong dollar on the global economy outweighs the positive impact. This impact is evident in the form of hyperinflation, international foreign debt, and other adverse outcomes. Finally, this paper provides informative comments for emerging economies and non-US developed economies to better mitigate the challenges posed by the current round of dollar appreciation.

<em>Roblox</em> and Meta Verch

<em>Roblox</em> and Meta Verch

Prospects of the Russian ruble’s internationalization in the context of sanctions restrictions

The article analyzes the opportunities and prospects of the Russian Ruble’s internationalization in the context of sanctions restrictions. Based on a comprehensive analysis of the stages and factors of currency internationalization, it is concluded that Russia does not possess the overwhelming majority of fundamental factors for the internationalization of its national currency on a global scale. Nevertheless, there are prerequisites for strengthening the Russian ruble as a regional currency. It is found that the ruble can make a significant contribution to the expansion of the volume of settlements in national currencies under trade contracts. The directions of development of infrastructure independent of Western fi nancial centers, capable of increasing the share of settlements in national currencies, are considered. The prospects of creating a common unit of payment in the EAEU space are assessed. A model of the two-contour monetary and fi nancial system of the EAEU is proposed, its institutional framework is defined and formulated. A scheme of foreign trade settlements between counterparties from two diff erent countries is designed within the framework of this model. It is stated that the mutual off set of payments can signifi cantly reduce the needs of countries in real currency of unfriendly countries when carrying out trade exchange. As a result, the pressure on their balance of payments can be eased. Thus, the implementation of the proposed model will preserve national currencies as the main attribute of state fi nancial sovereignty and increase their stability. It can serve as an eff ective means of equalizing the relative level of regional productivity by dividing cash flows. The article concludes that in case of establishment of two-contour monetary and financial system within the framework of the EAEU, Russia will have an opportunity to become its center and increase its geoeconomic and geopolitical potential.

Research on the Internationalization Path of RMB based on the Analysis of Peripheral Circulation

The internationalization of RMB is of great significance to China's financial development and the reform of the international monetary system, and it is the inevitable result of the evolution of the world economic structure. The internationalization of RMB is the inevitable result of China's economic development and the reflection of China's international competitiveness. The internationalization of RMB will help China to become a world economic power. The circulation around RMB is only the initial stage of currency internationalization. Currency internationalization requires strict conditions and must bear the price of giving up the independence of domestic monetary policy. The "the belt and road initiative (B&R)" initiative promotes China enterprises to enter the global market and increases the opportunities for RMB capital export. Some progress has been made in the internationalization of RMB, which has been recognized by the international community. Based on the significance of currency internationalization, this paper expounds the influence of RMB internationalization on China, and further studies the mode and strategy choice of RMB internationalization on the basis of analyzing the circulation path around RMB.

Research on the Role of RMB-denominated Oil Trade in Promoting RMB Internationalisation

With the development of the global economy and the continuous expansion of international trade, currency internationalization has become an important goal of monetary policies of various countries. In this context, China has become the second largest economy in the world, and promoting the internationalization of the RMB has become one of the urgent issues for the Chinese government to address. In recent years, the internationalization of RMB has achieved remarkable results, but the use of RMB is still limited in the international commodity market, especially in the oil market. This paper takes the RMB-denominated oil trade as an entry point to analyze its contribution to the internationalization of the RMB and its potential impact. The paper first explains the importance of oil trade to the global economy and analyzes the current situation of the oil market with the US dollar as the main settlement currency. As one of the most important energy sources in the world, oil occupies a pivotal position in international trade. However, for a long time, the pricing and settlement of the oil market has relied mainly on the U.S. dollar, which gives the U.S. dollar a significant dominant position in the global arena and also exposes other countries to the risks associated with exchange rate fluctuations in oil trade. Second, this paper analyzes theoretically and empirically the role of RMB-denominated oil trade in promoting RMB internationalization. Theoretically, RMB-denominated oil trade will help increase the demand for RMB in the international market, reduce exchange rate risk, and thus accelerate the process of RMB internationalization. The empirical analysis shows that in recent years, with the growing volume of China's oil imports and the advancement of RMB internationalization, RMB-denominated oil trade has achieved initial results, and some countries have started to adopt RMB for oil settlement. Then, the paper discusses the challenges faced by RMB-denominated oil trade and the policy measures that the Chinese government should take. In the current international financial system, the U.S. dollar is "entrenched" as an international currency, and it is not easy to realize RMB-denominated oil trade. The Chinese government should strive to improve the credibility and convertibility of the RMB, actively participate in international oil market rule-making, strengthen cooperation with major oil producing and marketing countries, and promote domestic financial market reform to create a favorable external environment for RMB-denominated oil trade. Finally, the paper concludes that RMB-denominated oil trade is important for RMB internationalization. By realizing RMB-denominated oil trade, it is expected to improve the position of RMB in the international market and create favorable conditions for RMB internationalization. At the same time, it will help promote global currency diversification, reduce the sensitivity of China's economy to external shocks, and achieve more stable and sustainable economic development.

China’s central bank digital currency (CBDC): an assessment of money and power relations

ABSTRACT This article reflects on the meaning of China’s Central Bank Digital Currency (CDBC) with respect to money and power relations to argue that it will not represent a rupture with the dollar centric international monetary and financial system (IMFS). It combines three theoretical approaches – on the nature of money, on currency internationalisation and on currency hierarchy – to build an analytical framework that adds to the literature that strives to understand the dynamics between money and state power. This framework stresses the fundamental place of currency dominance and of an underlying currency hierarchy that explains the broader configuration and evolution of the IMFS. While there is an enormous asymmetry between the economic weight of China and the international use of its currency (physical or digital), it does not necessarily follow that this tension will be resolved by assembling a fairer distribution of the economic and political advantages that come along with issuing a currency that is used by the rest of the world (the so-called ‘exorbitant privilege’).

Asymmetric and time-frequency based networks of currency markets

We examine asymmetries in the volatility spillover of international currency markets over the short and long run, with a focus on the COVID-19 pandemic. In doing so, we propose partial quantile coherency network approach. Our results indicate heterogeneous behaviour of currencies’ volatility networks under various market conditions across investment time horizons. The volatility networks are driven by developed currency markets and by geographical proximity in Europe and Asia. We do not find asymmetry in the dependence structures of positive and negative currency volatilities. The dependence structure changes during COVID-19 especially in the long run. Many currencies show disentangled behaviour, which suggests their hedging and diversification potential.

Financial geography I: The state-finance nexus

In the first of my reports on financial geography, I focus on a growing body of work that engages with the state as a vital and strategic actor in financial markets and in the global economy. After the 2008 global financial crisis, austerity measures and impacts on public finance have reshaped local-central government relationships with increasing use of financial instruments and market solutions. The growing prominence of sovereign wealth funds, shifting roles of national development banks and central banks, and impacts of currency internationalisation are raising questions about new forms of financial statecraft and opportunities for changing configurations of global hegemony. Taken together, a renewed engagement with a political economic lens and focus on state-finance relations illuminate the changing positionalities of economies and financial actors in the spatial organisation of international financial and monetary relations.

A parsimonious model of trade, finance and endogenous currency choices in international reserves

We provide a parsimonious model with two international currencies (dollar and quasi-dollar) to examine the endogenous linkage among trade invoicing, bank funding and optimal currency choices in central banks’ international reserves. We find that (1) when the exchange rate volatility is high, an increase in dollar debt share would lead central banks to hold a larger dollar share in international reserves; (2) when exchange rates of dollar and quasi-dollar move in the same direction, they tend to cut dollar share in reserve holdings. We test these predictions using a newly-available foreign exchange reserve currency composition dataset and find considerable support.

Factors influencing the choice of the invoicing currency in international trade: Panel data analysis for 55 countries

Research background: Most transactions in world trade are invoiced in several international currencies. The changes in the distribution of the great economic powers and the strengthening of the position of developing countries make it necessary to consider the factors determining the choice of trade invoicing currency and to assess the prospects of the dollar as an invoicing currency and the possibility of strengthening the position of developing countries' currencies in this function. Purpose of the article: The aim of the paper is to assess the factors influencing the choice of invoicing currency for international trade in 2000?2019. Methods: The analysis of factors influencing the choice of international trade invoicing currency is based on panel data modelling. The study is conducted for a group of 55 countries. It is assumed that the following variables may influence the currency position in the trade invoicing function: the share of the issuer's country in the bilateral trade, inflation and exchange rate. Findings & value added: The analysis showed that despite the decreasing share of the United States in world trade, the U.S. dollar remains the most important export invoicing currency. The main factors influencing the dollar's dominance are the U.S. share of countries' exports, inflation in developing countries, and the exchange rate in advanced economies. The great significance of trade share as a determinant of the position of the trade invoicing currency is an important indication of the strengthening position of developing country currencies, particularly the Chinese yuan. The obtained results confirm, with the use of more complete data, the validity of the dominant currency paradigm and enrich the still underdeveloped analysis in the area of international macroeconomics using panel data analysis.

Analysis of the Factors Affecting the Price Fluctuation of Bitcoin

According to the monetary theory, this paper believes that the demand for Bitcoin mainly includes two aspects: transaction demand and investment demand. This paper further discusses the impact of different demands on the price of Bitcoin based on two aspects of demand. Transaction demand and investment demand together affect the supply and demand relationship of the Bitcoin market. The empirical results show that the volatility of Bitcoin price is higher than that of international currencies and stocks as investment tools. This article emphasizes that the price of Bitcoin is primarily affected by supply and demand.

A COMPARATIVE ANALYSIS OF VECTOR AUTOREGRESSIVE MODEL AND NEURAL NETWORKS

In this work, vector autoregression and neural network approach to multivariate time series analysis is presented. A vector autoregressive model and multilayer perceptron network with back-propagation, gradient descent algorithm have been designed to model the monthly average exchange rates of three international currencies with respect to naira. The series span over the period of January, 2012 to August, 2017. The original series were preprocessed to smoothen the distribution and facilitate fast convergence in the network algorithm. In training the network to learn the combined series of the exchange rates, a remarkable achievement was made. Adding to the beauty of the network model is the fact that the number of units of the input layer was predetermined through the VAR model. Using some model performance measures (RMSE, MBE and R2), it was recorded that the neural network approach performs better than the VAR model as it yielded minimum error of prediction.

A model of international currency with private information

This paper studies a model in which nominal exchange rate is determined by asymmetric information. Within a two-country two-currency search-theoretic model, buyers have complete information, while sellers have incomplete information regarding the real value of foreign currencies in decentralized meetings. With no restrictions on which currency to use to settle transactions, sellers’ domestic currency turns out to be the preferred means of payment in equilibrium and various currency regimes emerge endogenously. The degree of information asymmetry and economic openness have ambiguous impacts on the nominal exchange rate due to the variety of currency regimes. When two countries interact in a policy game of setting inflation targets, the equilibrium inflation targets also depend on the degree of information asymmetry and economic openness, since these factors affect the seigniorage revenue and accordingly central banks’ temptation to inflate.

The international political economy of the Renminbi: currency internationalization and reactive currency statecraft

The international political economy of the Renminbi: currency internationalization and reactive currency statecraft

Znaczenie dolara amerykańskiego jako waluty kluczowej w międzynarodowym systemie walutowym

Purpose – The aim is to assess the importance of the US dollar as the key world currency after 2008. Research method – The basic research methods used in the article are the study of world literature and the analysis of statistical data delivered by the European Central Bank, the Bank for International Settlements, the International Monetary Fund and SWIFT. Results – Although there has been discussion for several decades about the likelihood of the US dollar losing its position in the International Monetary System, it still maintains its status as the most important international currency. The dominant political and military position of the United States, the size of the economy and its still key share in world trade, and, above all, the market of instruments denominated in American currency and the dominant share of the dollar in the currency market, confirm the current position of the US dollar. This does not mean, however, that it will retain its current position. Analyzing historical changes in the leadership position among international currencies, one should not expect a revolution. Originality / value / implications / recommendations – The analysis of the importance of the US dollar as the key currency in the IMS, undertaken in the article, shows the importance of the problem and implies the need to carry out further research on this issue.

利他的行動の空隙とチームパフォーマンス

This study proposes an innovative way to diagnose the state of the organization by analyzing the log data of the company's internal currency to the management of the divided organization. In companies, individual optimization of organizations, silos, isolation of individuals, and division of organizations often become issues. In this study, we quantitatively grasp connections between people from data of a company's transmission and reception logs through an internal currency with the theme of “thanks”, We also verified the relationship with the team's performance to examine how altruistic behavior fills the division between organizations. The analysis results show that brokers who fill structural gaps have an important influence on team performance. And the more broker younger than the average age of the team have connections with key players of other teams, which have the higher the team performance.

Перспективы интернационализации рубля в современных геополитических условиях

This article analyses possibility of expanding an international usage of Russian currency in the circumstances of unprecedented sanctions, which were imposed with the purpose to break Russia’s external trade relations and to isolate this country from the global financial system. Author comes to conclusion that dominance of the non-cash money in the international transactions has resulted in the full dependence of all modern currencies on specially created settlement systems. Nowadays currencies can circulate internationally only within such systems. Therefore any national currency is exposed to potential restrictions by the country, which issues dominant global currency (i.e. the US Dollar). This fact makes it very difficult to expand internationalisation of the Rouble by traditional methods. In the modern circumstances the key prerequisite of such expansion is existence of the Rouble settlement and payment systems, which can operate independently of the foreign ones. Such systems were created well before 2022 and technically can facilitate transactions with the Rouble worldwide. However, the problem is that potential foreign counterparts are very cautious to work with any Russian systems due to a risk of the secondary sanctions by the USA. Also widely publicised the Russian government requirement that European importers must pay for Russian gas in Roubles did not help to widen internationalization of Russian currency, as this was Rouble payment in name only, but not in truth. To solve this problem it is suggested to use combined methods: i.e. to extend independent Russian settlement & payment infrastructure worldwide through formal and informal agreements; to broaden the usage of non-cash money and quasimoney; to issue financial instruments, which can circulate worldwide, but outside the settlement infrastructure, which is controlled by the western countries.

Позиции и перспективы валют стран с формирующимися рынками

Over the past two decades of the 21st century, there has been an increase in the role of the currencies of emerging markets in the global foreign exchange market, but their positions in the international monetary system have not significantly changed. The article demonstrates the continuing gap between the role of the leading emerging market economies in the global economy and finance and the position of their currencies in the international monetary system. This gap is driven by lower liquidity premiums for the currencies of EME countries, relatively underdevelopment of their financial systems and greater financial instability, restrictions on the placement of securities denominated in national currencies on international financial markets, as well as geopolitical factors (including the risks of imposing sanctions regimes by the developed countries). It is shown that the internationalization of the EME currencies is facilitated by such factors as internal financial stability, the relative development of national financial markets and a significant role of issuing countries in world trade. On the example of China, the relative success of the policy of internationalization of the yuan is shown, on the example of Mexico and Russia, the role of participation in regional integration associations to expand the external circulation of national currencies. There is an increase in the role of geopolitical factors in determining the positions of individual EME currencies, especially since 2022. The scenario of fragmentation of the international monetary and financial system is considered, which implies a relative weakening of the positions of current leading world currencies with a relative strengthening of the positions of the individual EME currencies (primarily Chinese yuan). Measures are proposed to strengthen the positions of EME currencies in the new geopolitical conditions: activation of interaction processes in regional and mega-regional associations, formation of payment and settlement systems within them in national currencies using digital technologies, creation of regional markets for securities denominated in national currencies, the conclusion and activation of multilateral currency swap agreements between the central banks of EME countries.

Market-Oriented Reform of the Yuan Exchange Rate: Organizational and Analytical Aspects

The article traces the evolution of the market-oriented reform of the exchange rate of the yuan, the national currency of the People's Republic of China. The purpose of the study is to reveal the consistently implemented reform aimed at domestic economic growth on the internationalization of the yuan exchange rate. A hypothesis was formulated according to which, in the conditions of an export-oriented economy, the internationalization of the exchange rate of the national currency without opening financial accounts of the balance of payments is able to remove the limits of economic growth, and thereby allows an adequate response to external and internal negative challenges (global economic crises, pandemic, sanctions, etc.). To test the hypothesis: 1) the specific practical measures are traced that were taken by the People's Bank of China to internationalize the yuan as a tool for attracting external resources for the growth of an export-oriented economy from 1994 to the present; 2) methods of statistical, comparative and step-by-step regression analysis, synthesis, generalization, as well as the logical method were used. The results of the study confirmed the correctness of the formulated hypothesis. Based on them, it is concluded that improving the market-oriented reform of the yuan exchange rate without opening financial accounts of the balance of payments may consist in creating a hidden target zone of the yuan exchange rate together with the reform of the currency system and the mechanism of currency issuance under the influence of the yuan equivalent of foreign exchange reserves. The theoretical significance of the results obtained consists in substantiating the variety of ways of internationalization of the national currency in relatively undeveloped domestic financial markets. The practical significance is connected with the generalization of current measures for further internationalization of the yuan without opening financial accounts of the balance of payments: the abolition of the average parity and the daily floating limit of 2%; the establishment of a hidden target zone for the yuan exchange rate based on the equilibrium exchange rate; the creation of exchange rate equalization funds for operations on the open market; optimization of the structure of reserve assets and increase shares of gold reserves.

Արժութային մրցավազք. պայքար գերիշխող դիրքի համար / CURRENCY RACE: STRUGGLE FOR DOMINANCE

The struggle for hegemony among the world's economic giants is growing from year to year, manifesting itself in various ways, including ambitious endeavors to achieve dominance in the international currency market. Calls to abandon the massive use of the US dollar in international trade have received particularly wide resonance in the last decade. Moreover, the list of countries implementing such appeals is gradually expanding, ranging from Brazil to the countries of Southeast Asia. How realistic are these calls? Are there any grounds for the implementation of these ideas and what are the consequences of abandoning the US dollar in international trade?