International Monetary System Research Articles

Does the Dollar Global Financial System Simply Intermediate Savings?

ABSTRACT The main point of this article is to debunk the idea that the global monetary and financial system simply intermediates savings across countries. A corollary of this idea is that US hegemony derives from the recycling of the savings of countries with surplus current accounts to those with deficit current accounts. This article argues that the international monetary system creates dollar-denominated assets and liabilities regardless of the current account positions of the countries in which borrowers reside. Furthermore, it is argued that the hegemony of the United States does not depend on the recycling of foreign surpluses. It enjoys a privileged position as a result of the differential in the return of its foreign investments compared to those of other countries, particularly emerging and developing countries. However, this yield differential does not depend only on liquidity, as the proponents of the money view argue, but also on the economic policies that emerging and developing countries put in place. This article argues that the international monetary system is rapidly changing. A sign of this change is the different composition of external financial assets in China’s balance of payments, with a greater share of loans to developing countries than foreign reserves.

Monetary processes in the world economy following the end of the Bretton Woods System

July 2024 marked the 80th anniversary of the creation of the Bretton Woods System (BWS). Its implementation proved to be the milestone for the history of the international monetary system, as it offered a giant step toward fiat money. This anniversary presents a good opportunity to assess its impact on the further sequence of events in the international monetary system. The BWS was far from being flawless. However, its imperfections offered strong incentives to search for new solutions aimed at making the entire system operate more smoothly. Subsequently, there can be talk about the intellectual heritage of the BWS and its impact on the most recent history in the area of the external use of money. The aim of this paper is to review this heritage by focusing above all on the years which followed its demise in the early 1970s until the early 2020s.

Mechanisms of Monetary Cooperation in BRICS: First Results and New Challenges

The issues of creating a more equitable global monetary and financial system have been constantly in the focus of the BRIC countries since 2006. Gradual introduction of unprecedented restrictive measures against one of the participants – Russia – forced member states to intensify the work on diminishing their dependence on actions of the United States, searching for alternative ways of payment for goods and services and reducing transactions in US dollars. The article analyses prerequisites for development of monetary cooperation within BRICS and implications of the measures already taken in this direction. The extent to which introduction of a common currency can contribute or, on the contrary, create barriers to deepening economic integration within BRICS is explored. The experience of introducing euro in the EU shows that the decision on joining a common currency is not just an economic, but also a political one. Ignoring the risks associated with a radical change in payment systems can lead to serious disruptions in the world economy and push exporters and importers away from implementation of agreements reached at the highest level. The authors come to the conclusion that speeding up currency cooperation without relying on comprehensive consideration of the interests of BRICS countries and assessment of potential costs and benefits can lead to deterioration of the terms of mutual trade against the backdrop of the US attempts to maintain the existing architecture of global monetary system with absolute domination of the US dollar.

Analisis Dinamika dan Tantangan Perkembangan Sistem Moneter Internasional Pada Ekonomi Global

This article discusses the international monetary system as a crucial element in maintaining global economic stability, regulating currency exchange rates, capital flows, and international trade. The system continues to face various challenges, such as exchange rate fluctuations, the impact of financial digitalization, and the threat of financial crises that could disrupt global equilibrium. This research aims to provide a deeper understanding of the dynamics of the international monetary system, which has evolved from the gold standard to the floating exchange rate system. The literature review reveals the significant role of international institutions like the IMF and the World Bank in coordinating monetary policies between countries to ensure global stability. The analysis results suggest that the international monetary system requires continuous reform, especially in addressing the challenges of digitalization and trade fragmentation. This article contributes to the development of knowledge by offering new perspectives on strengthening the international monetary system through technological innovation and international collaboration.

Evolution of the International Monetary System and the Internationalization of RMB: A Theoretical Analysis

The foundation of the global economy lies in the international monetary system, influencing worldwide trade, investment, monetary strategies, and financial steadiness. This system has experienced numerous significant transformations, such as the 1971 separation of the dollar from gold, the emergence and growth of the euro, and the slow globalization of currencies in developing markets. Presently, the international monetary system is predominantly dollar-focused and multilateral, grappling with issues like fluctuations in exchange rates and conflicts in monetary policy, resulting in worldwide economic disparities. Post the 2008 global financial crisis, the issues with the international monetary system have gained prominence, prompting a growing global demand for reforms in the existing currency system. The Renminbi's (RMB’s) internationalization stands out as a pivotal event, offering fresh research viewpoints and actionable instances for the development of the international monetary system. This study delves into the development of international currencies and the global spread of RMB.

How to make sense of the crisis of the international economic system: the emergence of the Group of Thirty and the debate on inflation (1978–81)

ABSTRACT This article explores the early history of the Group of Thirty (G30, 1978), which is an economic policy body committed to the analysis and spread of policy prescriptions as regards the evolution of the international economic and monetary system after the end of Bretton Woods. In so doing, this work represents the first critical recounting of the G30ʹs early experience from a historiographic perspective. The article frames the organizational roots and the early history of the G30 within the wider economic and political context that marked the transformations of the international system between the late 1970s and the early 1980s. Moreover, this article deals with one of the most challenging policy issues that characterized the international economic policymaking at that time: the spread of high inflation rates. The emergence of sustained inflation trends in Western Europe will receive specific attention. Finally, the article discusses the relevance that social and political concerns acquired in the very conceptualization of anti-inflationary and market-oriented measures, as these were promoted by the G30ʹs affiliates between the late 1970s and the early 1980s.

Монетарна ентропія в умовах економічної глобалізації

Introduction. Changes occurring in the nature of money in the context of globalization have long been of interest to economists. Instead, the events of recent years have shown that such changes can also be caused by profound transformations that are natural ones and subject to general physical laws. Problem Statement. Establishing the dependence of the further development of money as an economic category on the action of the second law of thermodynamics. The purpose is the analysis of scientific ideas at the junction of economics and physics (ecophysics) and their spread to the monetary sphere ,in particular considering the manifestation of monetary entropy in the process of the international monetary system. Methods. General scientific and special methods are used: analysis, synthesis, description, comparison, theoretical generalization and abstract-logical analyses. Results. This publication introduces the concept of monetary entropy as a state of chaoticization of the essence of money (entropy of money) and the monetary system as a whole. The development of monetary entropy is considered as the result of cyclical development according to the Hegelian model “thesis-antithesis-synthesis”, which allows to avoid complete chaosization of the monetary sphere due to its transition to a new level of the spiral of development. The current state of the development of money as an economic category and the international monetary system as a whole, caused by the impact of the globalization process on them, proves that they are at the stage of another transition from entropy to negentropy, which can lead to the emergence of Global Money. Conclusions. Turning to the issue of predicting the future of money, it should be noted that there is an opinion that soon money will simply become a relic of the past and disappear altogether, leaving the probable technological singularity as one of its consequences, the very liquidation (more precisely, the senselessness of existence ) of money as an economic category. One of the possibilities of the technological singularity is the emergence of a post-scarcity society in which there will be a surplus of resources and the needs of every member of society will be fully satisfied (a variant of capitalist communism, when even an unconditional basic income will appear to be an unacceptable minimum for satisfying needs, because the principle from each according to his abilities to each according to his needs will be implemented. However, the change will not happen overnight, so there will most likely be a transition period during which humanity will still use money and the concept of money will evolve rather than disappear completely.

On Problems of International Liquidity in Capitalist World Economy

In capitalist countries, there has been a very lively debate in recent years about the legitimacy or illegitimacy, adequacy or inadequacy of the current form of the international monetary system. One of the main indirect motives for this general attention now being given to international monetary problems is the unfavorable development and weakened position of the reserve currencies, i.e. the US dollar and the pound sterling. The dollar and the pound form, to a greater or lesser extent, part of the monetary reserves of all capitalist countries, and concern over their prospects necessarily leads to considerations of the possibilities and reliability of the entire current international monetary system.

The Fed as the world’s central bank and the hierarchy of international monetary system

The Fed as the world’s central bank and the hierarchy of international monetary system

How did the IMF evolve into a policy advisor? Shaping the conditional lending practice

ABSTRACT The International Monetary Fund (IMF or the Fund) is an organization responsible for stabilizing the international monetary system. To this end, the IMF manages its members’ balance of payments problems by providing conditional loans. Through conditionality, the IMF monitors national economic policies. This study examines the historical origins of IMF conditionality, focusing on the Fund’s human capital: (1) specialized knowledge to examine members’ problems and design corrective measures, and (2) ability to consult with borrowers. The findings are as follows: (1) the Fund’s Research Department staff developed adjustment theories that became a key component of IMF conditionality; (2) the Managing Directors introduced the practice of conditional lending driven by bureaucratic motivation for the Fund’s organizational prosperity; (3) the Fund’s staff reviewed lending procedures through annual consultations; and (4) the Fund’s human capital played a key role in shaping the practical basis of IMF conditionality. Most related research has emphasized the influence of the United States on IMF conditionality. This study, however, shows that the U.S. could not create conditionality without the participation of the IMF’s staff. The results of this study offer a new insight into the debate on financial oversight from an international perspective.

The Evolution of the International Monetary System: Impacts on Multinational Firms and Global Trade

The International Monetary System is a global system that regulates money transfers between different nations. It includes currency exchange rates, regulation of international payments, legislations on capital movements, and worldwide financial organizations, including the IMF. The paper analyses how the change over time of the International Monetary System (IMS) affects the international trade and MNCs. Thus, from the Bretton Woods new exchange regime established in 1944–1971 to the current floating exchange rate system, it has been analyzed in regard to the IMS's historical development. Because of the increasing volatility in the currency rate, this has consequently had an impact on the stability of international transactions and trade volumes. The IMS study investigates exchange rate systems, capital flow regulations, and the role of international financial organizations, including the IMF. For its methodology, the study resorted to a mixed-method approach, combining numbers analysis-that includes regression models and time- series data on exchange rates, amounts of international trade, and MNC performance-with analysis of the historical record and inspection of IMF policy documents. The study shows that trade goes down during big financial troubles, like the Asian Financial Crisis in 1997 and the Global Financial Crisis in 2008. It also shows that changes in exchange rates make global trade smaller, especially during these crises. Also, while IMF help, such as structural adjustment programs, often causes short-term problems for multinational companies (MNCs), like less foreign direct investment (FDI), these policies usually help stabilize economies and lead to recovery in the long run. The outcomes indicate how the IMS, international trade, and multinational corporations are intertwined. Acquainting oneself with the fluctuating money system is very crucial because it enables a person to make informed decisions about the world economy. Keywords: International Monetary System (IMS), Exchange Rate Volatility, Multinational Corporations (MNCs), International Trade, International Monetary Fund (IMF)

Literature Study: International Monetary System and the Threat of Recession

This study was conducted to gather sufficient information on the relationship between the International Monetary System and the threat of recession. The method used in this study is through a literature study that collects previous research in answering the relationship and role of the International Monetary System with the threat of recession. The IMF and World Bank estimate that the world economy will experience a recession which is also accompanied by an increase in the rate of inflation in 2022 and 2023. Big countries in the world economy such as Europe, the USA, China and India are also expected to experience economic recession and high inflation. Interestingly, the ASEAN 5 region (including Indonesia) will actually experience positive economic growth with a moderate rate of inflation. Based on the results of this literature, it can be concluded that an economic recession can threaten the world economy, especially in the field of the international monetary system.

Current Development and Future Outlook of China CBDC (e-CNY): A Literature Review

The great success of Bitcoin has drawn the attention of the world to the field of digital currency. Stablecoins and CBDC have come out right after cryptocurrencies. This study focuses on analyzing CBDC, especially China CBDC (e-CNY), elaborating and comprehending arguments from several outstanding essays in this field. In this study, the author summarizes the development history of e-CNY, concludes the competitive advantages of e-CNY over other types of payment methods, points out the potential shortcomings of e-CNY, and implements possible solutions. In order to provide reliable suggestions and recommendations, the author has compared e-CNY with several existing CBDC from different countries and regions in the world, including CBDC from Singapore, Canada, and England. In the short run, China CBDC can enhance finance monitoring and reduce M0 supply. In the long run, it could stimulate the internationalization of the RMB and boost the evolution of the global monetary system.

The ecological currency hierarchy: empirical support for currency power driven asymmetries in environmental and social autonomy

ABSTRACT The intersection of the International Monetary System (IMS) and ecological degradation and social inequality remains, despite some excellent examples, a relatively underexplored area. This paper draws upon the literature to argue that an ecological currency hierarchy (ECH) describes how a hierarchy of currencies grants Core countries considerable autonomy over their economic direction while Periphery countries are subject to conditions in the Core. As capital continuously seeks returns, Core economies can sell debt regardless of global economic circumstances, while the Periphery may only do so when returns in the Core are high and risk tolerance is high. When conditions in the Core offer low returns on investment, foreign direct investment floods into the Periphery driving up their debt levels and material extraction. This structural debt/material extraction dynamic is a function of having a non-Core currency and leaves Periphery countries unable to engage in long-term, autonomous economic planning. We conduct econometric analyses using World Bank, International Monetary Fund, and International Resource Panel data to confirm that having a Core currency increases demand for debt and lowers material extraction, while also confirming that rates of return on investment in the Core drive foreign direct investment, debt, and material extraction in the Periphery.

The new world monetary system – prerequisites for creation and implementation mechanisms

The article examines the main directions of creating a new global monetary system as the basis for the formation of an alternative global financial architecture. The strengthening of the role of the BRICS countries in the global financial and monetary system is shown. The main financial indicators of the New Development Bank (NDB) are analyzed, including the history of its creation, share capital, loan portfolio, borrowed funds from the global capital market. The prospects for the development of the NTB and its ability to participate in the formation of a new global financial and monetary system independent of the Anglo-Saxon financial elite and international financial institutions controlled by it are assessed. The possibilities of introducing a single Brics unit of account into the NBR are being considered.

Research on safe-haven currencies under global uncertainty —A new perception based on the East Asian market

The backdrop of this research is the high global uncertainty that has amplified the demand for safe-haven assets, particularly in the East Asian market. This paper redefines the concept of a “safe-haven” currency to align with contemporary geopolitical and trade policy uncertainties, diverging from the traditional volatility index (VIX) risk measure. We investigate the risk aversion properties of East Asian currencies under these nonmarket risks using dynamic heterogeneous panel data analysis and robustness checks with double machine learning. Empirical results reveal that no East Asian currency qualifies as a safe haven under geopolitical risk and trade policy uncertainty. However, the Japanese yen (JPY) maintains its status under the VIX indicator. This study highlights the insufficiency of traditional safe havens like the JPY and underscores the importance of considering nonmarket risks, challenging the effectiveness of traditional investment strategies amid modern geopolitical and policy uncertainties. The findings suggest that investors should prioritize nonmarket risks and call for reform in the global monetary system to enhance currency resilience. The novel methodological approach to evaluating safe-haven currencies addresses the need for diversified currency portfolios to mitigate nonmarket risks.

The Future of the Yuan: Measuring the "Power" of Renminbi (RMB)

Money is one of the most important “creatures” of the state. It has both soft and hard power at the same time. The power of a country can be seen from the strength of its currency exchange rate and its spread, and it is found that the use of Yuan has increased significantly, especially in trade between China and its trading partners. This is driven by various factors, such as the Chinese government's policy to promote the internationalization of Yuan, the establishment of an offshore Yuan market in Hong Kong, and Yuan's role in the Belt and Road Initiative. Although the Yuan is not yet a global reserve currency, this article concludes that the Yuan's Power as Hard Power and Soft Power is increasing, and the Yuan has strong potential to play a greater role in the international monetary system in the future, supported by China's economic growth and the government's efforts to increase its use globally.

Международные тренды цифровизации валютно-финансовых отношений: от глобализации к децентрализации

The need for the use of new, digital forms of organization of monetary and financial settlements with foreign partners, as well as the formation of a national system of secure payments. The article presents the result of analysis of motivations of introduction of digital currencies of central banks (positive and negative moments of the considered process). The article gives an overview of existing international payment systems, including the Russian one, and identifies advantages and disadvantages. The main tendencies of the cryptocurrency market as a possible mechanism of formation of decentralized finance are considered.

ტრიფინის პარადოქსი ოცდამეერთე საუკუნეში

This article presents a fresh perspective on the Triffin Paradox, a concept introduced by economist Robert Triffin in the mid-20th century that continues to have a significant impact on global financial systems and policies. Despite the passage of time and the evolution of the economy, the fundamental principles of the Triffin Paradox remain relevant in today's financial discussions. The paper provides a thorough analysis of the ongoing relevance of the Triffin Paradox in the modern global economy. It draws upon historical context, theoretical frameworks, and empirical evidence to shed light on how the paradox continues to manifest itself in the current financial landscape. Specifically, it explores how the dominance of the U.S. dollar as the world's primary reserve currency perpetuates structural imbalances and systemic vulnerabilities, echoing the concerns raised by Triffin. Moreover, the paper delves into the implications of the Triffin Paradox for various stakeholders, including policymakers and central banks. It examines the challenges posed by the pursuit of domestic monetary policy objectives in an interconnected world, where the stability of the global financial system relies heavily on the stability of the reserve currency issuer. Additionally, the paper explores potential strategies for mitigating the risks associated with the Triffin Paradox and fostering a more sustainable international monetary order. By integrating insights from economics, finance, and international relations, this paper contributes to a deeper understanding of the Triffin Paradox and its enduring significance in shaping contemporary financial dynamics. It emphasizes the need for policymakers and stakeholders to address the inherent structural tensions in the global monetary system, with the goal of promoting financial stability, economic resilience, and inclusive prosperity worldwide.

Multi-central bank digital currencies arrangements: a multivocal literature review

PurposeThe present study aims to systematically synthesize the academic and industrial literature on multi-central bank digital currencies (m-CBDCs) arrangements.Design/methodology/approachThe study adopted a unique multivocal literature review methodology that considers both white and grey literature. For white literature searches, the study relied on Scopus, Web of Science (WOS), and Google Scholar bibliometric databases; for grey literature searches, the study used the Google search engine.FindingsThe findings of the study illustrated that M-CBDC arrangements, through various design options, have the potential to revolutionize the contemporary international payment system. M-CBDC arrangements will lead to more integrated financial systems and promote economic growth. However, m-CBDC arrangements will also have serious macroeconomic implications, such as contagion and currency substitution risks.Research limitations/implicationsThe present review is one of the earliest reviews of m-CBDC arrangements. In addition, the findings of the study offer valuable insights for both academicians and policymakers.Originality/valueThe study is also one of the pioneer studies in management studies that apply a multivocal literature review methodology.