The rise of a new anchor currency in RCEP? A tale of three currencies
Economic Modelling
; 104, 2021.
Article
in English
| Scopus | ID: covidwho-1437446
ABSTRACT
We propose a flow-based criterion (intensity of use) and a stock-based criterion (stability of value) for choosing an anchor currency. This conceptual framework is applied to analyzing the RCEP region. According to the estimated TVP-VAR model, the influence of the US dollar in the region was weakened during the global financial crisis and the COVID pandemic, creating an opportunity for both Chinese Yuan and Japanese Yen to compete for the anchor currency. In terms of the intensity criterion, China accounts for the largest share in the regional share, but Yen seems to have an upper hand in the stability criterion. The sophisticated cooperative-competitive relationship between China and Japan may prolong the birth of a new anchor currency. Before then, US dollar still holds the role and the RCEP regional trade is subject to excessive volatility. © 2021 Elsevier B.V.
Full text:
Available
Collection:
Databases of international organizations
Database:
Scopus
Language:
English
Journal:
Economic Modelling
Year:
2021
Document Type:
Article
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