Tag Archives: reserve currency

The main lesson I want to draw from this post is (excluding being autarkic/poor or being in a monetary union):  If a country wants to maintain a fixed exchange rate, the country must accumulate a lot of foreign reserves to be sovereign (or maybe some capital controls?)  If a country wants to have floating exchange rates, it must convince its trading partners (or its trading partners’ trading partners) to hold its national currency as foreign reserves. losinterestMonetary Sovereignty...

Those who’re eagerly awaiting the end of the “dollar hegemony,” or the end of the dollar as the top global reserve currency, well, they’ll need some patience, because it’s happening at a glacial pace – according to the IMF’s just released data on the “Currency Composition of Official Foreign Exchange Reserves” (COFER) for the second quarter 2018. What it confirms: Global central banks are ever so slowly losing their appetite for being over-exposed to US-dollar-denominated assets, though...

Not all "automatic stabilisers" in the economy are due to government policy; there are patterns of private sector behaviour that tend to act in a counter-cyclical fashion. The role of the external sector is an important stabiliser (at least most of the time). This article is a basic primer on the subject.... Bond Economics Exports And The CycleBrian Romanchuk

By Marc Chandler (this post first appeared on Marc to Market) There is nothing quite like a falling dollar to spur take of the erosion of the greenback’s reserve status.  There has been talk for several months that China is preparing in yuan-denominated oil contract (with an embedded gold option).  It has not been launched yet, but some observers see it as a blow to the dollar’s role. We are...

Global appetite for US Treasuries as "safe assets." This is a primary function of a reserve currency as a saving vehicle that is regarded as a safe haven.EconomonitorCurrent Account Deficits and Safe Assets Joseph P. Joyce