International Monetary System Research Articles

Structural conditions for currency internationalization: international finance and the survival constraint

This paper examines the relationship between currency internationalization and economic structure. It argues that the hierarchical and asymmetric architecture of the international monetary system imposes a ‘survival constraint’ upon non-center countries that obliges them to generate net inflows of the international center currency to finance their payment commitments. It outlines why management of this constraint has historically been associated with a development approach that prioritizes exports and investment over domestic consumption and illustrates how this development approach creates economic structure subject to path dependence and network effects, which perpetuates the role of non-center countries as users of the international currency and the role of the center country as supplier of the international currency. On this basis, it is argued that currency internationalization cannot be pursued in isolation from broader economic policy, but rather requires economic structural change, political mediation and accommodative balance of payments management. Specifically, raising the international profile of the Chinese renminbi would require rebalancing of the Chinese economy towards domestic demand, whereas the status of the US dollar is intimately intertwined with the international openness of the US economy.

The Entanglements of Europe: History, Geography, Identity

Europe is a continent of extraordinary variety and diversity geographically, ethnically, nationally, culturally, economically and politically. Yet at the same time all its parts are and always have been so deeply linked by their destiny that this continent can accurately be described as a single albeit complex political entity. Anything crucial in any area of human endeavour occurring anywhere in Europe always has had both direct and indirect consequences for our continent as a whole. The history of Europe is, in fact, the history of a constant searching and reshaping of its internal structures and the relationship of its parts. Today, if we talk about a single European civilization or about common European values, history, traditions, and destiny, what we are referring to is more the fruit of this tendency toward integration than its cause.

AN ECONOMIC STUDY OF THE IMPACT OF FOREIGN AGRICULTURAL TRADE AND SOME MACROECONOMIC VARIABLES ON THE EXCHANGE RATE IN IRAQ USING THE FMOLS MODEL FOR THE PERIOD (1990 -2015)

Since the establishment of the global monetary system, economic relations have been intertwined as well as the high rates of trade and the multiplicity of currencies traded as the economies of the world are linked to each other in such a way that monetary policies applied in certain countries affect the economic policies of other countries. The objective of this paper is to investigate the impact of foreign agricultural trade and some macroeconomic variables on the behavior of exchange rate whose effect is reflected on the structure of foreign agricultural trade. To fulfill paper requirement data were collected from secondary sources and one source was depended in collecting data which is ministry of planning – central statistics organization. The research reached a number of results, the most important of which is the absence of an impact on both the agricultural exports and the interest rate on the exchange rate, while the agricultural imports and the inflation rate and the GDP significantly affected the Exchange rate fluctuations, and recommended the need to diversify the sources of financing the balance of public payments perhaps the agricultural sector is one of the important sources after the oil sector to obtain hard currency as Iraq's dependence on the export of oil only makes it vulnerable to fluctuations in oil prices globally, at an exchange rate level commensurate with the nature of the Iraqi economic life and the use of the managed exchange rate (administratively controlled).

Performing Labour’s (Non)Futures

Public performances carried out in support of the movement for a universal basic income—such as a massive ‘currency-dump’ of Swiss francs in a public square by a group of Swiss artists and activists, a series of ‘speculative advertisements’ by US artist Josh Kline, and a ‘robot march’ through the streets of Zurich—have tended to establish spectacular equivalencies between bodies and units of currency, and between bodies and machines, to demonstrate that the future of labour is marked by both economic abundance and unprecedented labor-substitutability. Historically, the concept has emerged from points across a wide political spectrum and the movement holds together a set of divergent political ideologies, which share the belief that the future might be simplified and secured by an economic floor. The universal basic income idea is, overall, profoundly performative, in that it attempts to model the ultimate pragmatism of wider social nets of generosity, and does so by representing the embodied conditions that might be brought into being by such generosity. In this way, the utopian heuristic of an unconditional, guaranteed income is said to be, in the words of Belgian political ethicist Philippe Van Parijs, an ‘instrument of freedom’ and a ‘device for economic sanity’. The question is though, as is often the case: freedom and sanity for whom? The movement, in reality, often falls short of its ‘universal’ aim. Nonetheless, its basic aspiration points to a potential transformation in the way social and political claims are made on the global monetary system.

Modern trends in the evolution of the global monetary and financial system

Modern trends in the evolution of the global monetary and financial system

On the terrorism of money and national policy-making in emerging capitalist economies

Is national state policy-making more constrained by capitalist value-disciplines in emerging capitalist economies (ECEs) than it is in advanced capitalist countries? In order to explore this question, this article offers a spatialised form-analysis of the imperative that the capital relation imposes upon the form of the state in ECEs. The approach, grounded in the Marxian critique of political economy, integrates crucial insights from radical economic geography and Post-Keynesian/Minskian economics. I show that despite growing integration into the financial world market, ECEs have retained a subordinate positionality in what I call the relational geographies of money-power, and which are constituted by two overlapping sets of geographies: the geographies of the global monetary system, and the geographies of the global financial system. As a result, the contradiction between capital, money and the state takes a more acute form of realisation in ECEs than in advanced capitalist countries, making the management of monetary and financial affairs more difficult for the capitalist state. This, I argue, constitutes an additional layer of social determination on national policy-making in ECEs. More concretely, this manifests itself as a systematic volatility of exchange rates and a tendency to high real interest rates, enhanced scrutiny of national policy-making by international investors, rapidly shifting financial reputation and high pro-cyclicality of money-capital inflows, the build-up of specific forms of external vulnerability, brutal money-capital flight during financial distress, and heavy dependence on monetary policy in advanced capitalist countries. I conclude by discussing theoretical and political-strategic implications for labour-centred development.

РАЗВИТИЕ НАЦИОНАЛЬНОЙ СИСТЕМЫ ПЛАТЕЖНЫХ КАРТ В РОССИИ В УСЛОВИЯХ ЭКОНОМИЧЕСКИХ САНКЦИЙ

<p align="justify">Цель статьи - исследование основных этапов формирования национальной системы платежных карт (НСПК) в России в условиях экономических санкций. Авторами проанализированы ключевые факторы, характеризующие современное развитие НСПК, сделаны выводы о необходимости совершенствовать инфраструктуру приема и расчетов, активнее внедрять экономические стимулы для участников платежной системы. В долгосрочной перспективе российская НСПК сможет успешно конкурировать с международными платежными системами на российском рынке только в том случае, если будет способна внедрять инновации в сфере приема и обработки платежей, а также предлагать ценовые и функциональные конкурентные преимущества по своим продуктам. Результаты могут быть использованы экономистами-исследователями, кредитными институтами и национальными регулирующими органами для совершенствования развития национальной системы платежных карт, повышения ее эффективности и стимулирования роста безналичных платежей в стране. </font>

Offshore Dollar Creation and the Emergence of the Post-2008 International Monetary System

This paper studies the transformation of the International Monetary System (IMS) in the run up to and after the 2007-9 Financial Crisis. Adopting a Money View perspective, it argues that the IMS, in contrast to wide-spread skepticism, does have a system-like quality. This paper understands the IMS as a US-centered hierarchical payments system within which short-term debt instruments are issued as credit money by various public and private financial institutions, in particular central, commercial and shadow banks. With the Fed located at the apex of the IMS, credit money forms denominated in US dollars are located highest up in the hierarchy and trade at par with each other, whilst they typically have fluctuating exchange rates to credit money forms denominated in the units of account of other monetary jurisdictions. From this, the paper argues that the key component of today’s IMS is the 'realm' of offshore US dollar creation, which is situated in between US dollar-denominated credit money issued in the US ('onshore dollars') and non-US dollar-denominated credit money issued outside the US. In this 'offshore dollar realm', non-US financial institutions are able to create international liquidity via US dollar-denominated private credit money outside the US. paper systematically carves out the post-2008 setup of the offshore dollar realm with a focus on Eurodollar deposits, offshore money market fund shares, foreign exchange swaps and central bank swaps. With the institutional innovations materializing during the 2007-9 Financial Crisis, the IMS is now a public- private hybrid that fully mirrors the onshore US monetary system in the offshore dollar realm. This discussion paper is the first in a series of two complementary pieces on the past, present and possible futures of the International Monetary System. It lays the theoretical and historical foundation for the paper The Future of Offshore Dollar Creation: Four Scenarios for the International Monetary System by 2040, authored by Steffen Murau, Joe Rini and Armin Haas (https://ssrn.com/abstract=3191786).

The Future of Offshore Dollar Creation: Four Scenarios for the International Monetary System by 2040

In order to sketch the possibility space for the future setup of the International Monetary System (IMS), this paper develops four different scenarios that outline potential outcomes of the IMS’s evolution by 2040. These scenarios derive from the analytical exercise of adopting a Money View perspective of today’s institutional shape of the IMS. The paper argues that the IMS’s current setup crucially relies on the supply of US Dollar-denominated credit money forms issued by private and public institutions outside the United States — through Eurodollar deposits, central bank swaps as well as ‘shadow money forms’ created by non-banks such as overnight repurchase agreements, money market fund shares and foreign exchange swaps. As this ‘realm’ of offshore dollar creation forms the heart of the present IMS, the four scenarios project potential institutional developments in coming decades following different trajectories. The Continued Dollar Hegemony scenario depicts the sustained dominance of private international money creation via offshore dollars within the Pax Americana. The Competing Monetary Blocs scenario envisions the US, the EU, and China as three gravitational centers with private international money creation in the blocs’ peripheries via offshore dollars, offshore euros and offshore renminbi. In the International Monetary Federation scenario, countries have created a strong publicly organized IMS, comprising a multilateral framework of one international and several regional clearing unions, based upon Keynes’ ideas for an International Clearing Union. Finally, the International Monetary Anarchy scenario entails the post-crisis emergence of a non-system with a substantial breakdown of public and private international monetary cooperation and creation. This discussion paper is the first in a series of two complementary pieces on the past, present and possible futures of the International Monetary System. It is based on the theoretical and historical foundations developed in the paper “Offshore Dollar Creation and the Emergence of the Post-2008 International Monetary System”, authored by Steffen Murau (https://ssrn.com/abstract=3191981).

The influence of cryptocurrency on the future of the international financial payment system through the example of a bitcoin

The purpose of this article is to determine how the use of a bitcoin as an instrument of payment can affect the system of international financial payments and the banking system. The method of critical analysis of scientific and methodological literature is used and the materials of research executed by leading experts in the fields of international finance and IT in 2009-2017 are summarized. A bitcoin can become a serious competitor to banks, payment systems such as SWIFT in the implementation of major cross-border payments. It is even compared with gold because there is no risk for the counterparty in operations with it. We suggest that a bitcoin is an outstanding digital technology which can fundamentally change the world banking system, payment settlements and the global economy. The article proposes a classification of advantages, disadvantages and prospects of using a bitcoin as a means of payment between large financial institutions and banks. The perspective of increased competition between leading international payment systems in conducting large cross-border payments is substantiated. The prospects of further studies are determined. How do central banks need to reform the system of international financial payments in view of the inevitable introduction of cryptocurrency? How to implement new financial instruments based on blockchain technology and a bitcoin? What changes in legislation should be made to get the names of buyers and sellers of bitcoins, which will help to reduce financing of illegal activities?

Triffin Dilemma and International Monetary System : Evidence from Pooled Mean Group Estimation

This study is motivated based on concern from some renowned scholars and central bankers whom have raised the issue of the sustainability of the International Monetary System (IMS). Using the panel data set of four major international currencies, USD, JPY, EUR and GBP from 1973 to 2013 with Pooled Mean Group (PMG) estimator, to re-examine whether Triffin dilemma still exists through investigating the relationship between the reserve share, current account balance and real effective exchange rate. The evidence from the result indicates that Triffin dilemma exists only in the long run, and shows that in the long-run, current account balance is proportionate to the increased real effective exchange rate while varies inversely with the reserve shares. However, the estimation for the short-run is not significant to prove the existence of Triffin dilemma. In addition, we investigated the non-dollar panel sample and found that the international monetary system still suffers from Triffin dilemma even without the dollar. To overcome Triffin dilemma, immediate step such as having currency swap mechanism is recommended. In medium term, a multi-polar Monetary System is suggested, and in the longer time, a supranational currency will be used to replace all the currencies in the world.

Rola SDR w perspektywie zmian zasad funkcjonowania międzynarodowego systemu walutowego

Rozwój dyskusji wskazującej na potrzebę podniesienia efektywności międzynarodowego systemu walutowego sprawia, że pojawia się wiele propozycji jego reformy. Z przedstawianych w literaturze koncepcji modyfikacji międzynarodowego systemu walutowego wyłaniają się dwa główne stanowiska: 1) przejście w kierunku systemu wielodewizowego oraz 2) stworzenie globalnego systemu walutowego przez oparcie go na Specjalnych Prawach Ciągnienia (SDR) lub wykreowanie ponadnarodowego pieniądza papierowego. Te okoliczności są przesłanką do podjęcia badań, których celem jest analiza wykorzystania SDR w funkcjach waluty międzynarodowej oraz ocena możliwości reformy międzynarodowego systemu walutowego, polegającej na zwiększeniu roli SDR. Z przeprowadzonych badań wynika, że przejęcie przez SDR funkcji waluty międzynarodowej jest możliwe, jednak wymaga istotnych zmian w polityce krajów oraz stworzenia warunków do szerszego zastosowania SDR, zarówno w sferze transakcji oficjalnych, jak i prywatnych. Zastosowane metody badawcze obejmują studium literatury przedmiotu oraz analizę danych statystycznych, głównie IMF i UNCTAD.

Nationalizing gold: The Vietnamese SJC gold bar and the Indian Gold Coin

The popularity of gold in India and Vietnam is attributed to either cultural values or an undeveloped financial sector. Yet gold also serves as an important reserve asset for central banks, more so than ever following the 2008 financial crisis. By way of exploring this juxtaposition, I turn to recent campaigns in each country to promote a national gold form, the SJC bar in Vietnam and the Indian Gold Coin. Although the campaigns have been framed in oppositional terms—the Vietnamese state has sought to demonetize gold, the Indian state to promote its monetization—I reconcile this contradiction by examining the particular histories of gold in each country and why gold served as a particularly potent symbol of economic liberalization. Gold, I argue, ultimately links citizens in the Global South with actors in the heart of the international monetary system; thus the promotion of these two national brands of gold shows state‐led efforts to intervene in processes of value creation.

Voice and Exit: How Emerging Powers are Promoting Institutional Changes in the International Monetary System

In the aftermath of the 2008 crisis, emerging powers engaged in political and legal strategies to challenge the actual framework for global monetary governance. This article examines two categories of monetary strategies designed as “voice” and “exit” plans (Hirschman 1970). For the former, they aimed at gaining more participation inside the International Monetary Fund (IMF). For the latter, strategies were built as legal alternatives to manage future liquidity crises outside the current framework. Using this theoretical classification, this paper identifies institutional responses formulated by the G20 emerging powers in Asia and Latin America after 2008 crisis. The specific approach proposed by this article is to analyse how the legal framework for the management of international money influences their strategies’ design and outcomes. Up to present, it seems voice strategies are promoting only incremental modifications in institutions. Exit strategies, however, have the potential of being more successful. These strategies have been built as a network of bilateral swap contracts between central banks. Asian powers are more engaged in this type of legal strategy. Latin American countries tend to be recipients of these plans. Exit strategies, however, are moving multilateral cooperation away from the IMF, reinforcing institutional fragmentation and uncertainty on how the next liquidity crises would be managed.

FUNCTIONING MECHANISM OF BITCOIN

The connection between financial innovation and information technology industry has provided and kept the crypto currencies for some ten years on the market, a kind of offset of monetary evolution after the introduction of virtual, electronic and digital money. Although their essence is still wrapped up under the veil of secrets, the facts show that the value of Bitcoin as the first crypto currency has a rising trend, and that an increasing number of firms and individuals are deciding to use it. This will result in the emergence of over 1000 new crypto currencies. This paper explains the emergence and functioning of the Bitcoin, its characteristics and functions, the benefits and risks that it carries, as well as possible scenarios of further development of the international monetary system with crypto currencies.

From the World's Factory to a World Creditor: China's External Wealth and Excess Returns, 1997-2016

We study China’s external wealth, its net foreign assets position with valuation adjustment, and its excess returns. The net foreign assets of China, which are mainly dominated by foreign reserve assets and foreign direct investment liabilities, have grown rapidly since its entry to the World Trade Organization in 2001 and exceeded 14 percent of its gross domestic product at the end of 2016. In contrast, the excess returns of gross assets over gross liabilities, which mostly correspond to the sizable capital gains from the latter, are negative. These results occur mainly because of the composition effect between risky liabilities and safe assets, where China takes a short position in equity and a long position in debt. Our findings help elucidate the mechanism through which a high growth economy like China transfers its external wealth to the rest of the world when the domestic financial markets are less developed and safe assets are scarce in the international monetary system.

Parasal Sistemde Altının Yeri ve Altına Dayalı Finansal Araçlar - The Role of Gold in the International Monetary System and Gold Based Financial Instruments

Gold, that has been existed in each period of the finance history, is directly used as an exchange tool and a substantial reserve for the financial system. Besides it has been a saving and investment tool amongst the investors. Today it still remains on the agenda within various financial tools. The reason of preparing this study is the development achieved in Turkey recently, relating the Gold Bonds/Gold Certificates which is one of the gold based financial instruments contributing to the economic growth via “gold under mattress” belonged to the individual investors. Initially “the concept of gold” and then “the role of gold in the international monetary system” are mentioned in the study afterwards “gold trading markets” are briefly presented. By clarifying “the gold based financial instruments”; the study is finalized by results and conclusion chapter.

Economic consequences of disconnecting the Islamic Republic of Iran from the SWIFT international payment system

Economic consequences of disconnecting the Islamic Republic of Iran from the SWIFT international payment system

A New International Monetary System on the Horizon?

A New International Monetary System on the Horizon?

International monetary policy coordination in a new Keynesian model with NICE features

ABSTRACTThe authors provide a static two-country new Keynesian model to teach two related questions in international macroeconomics: the international transmission of unilateral monetary policy decisions and the gains coming from the coordination monetary rules. They concentrate on “normal times” and use a thoroughly graphical approach to analyze the questions at hand. In this setting monetary policy is conducted using interest rates rules and economic integration between nations does not necessarily create the case for the coordination of monetary policy. In particular, they show that the conduct of optimal national monetary policies does not make any difference with the coordination of national policies, as this creates a situation where the international monetary system operates “Near an International Cooperative Equilibrium” (NICE).