How can a currency achieve more widespread international use? We study the internationalization of the Chinese renminbi (RMB) through the lens of a unique policy experiment in Argentina. In 2023, amid a severe dollar shortage, Argentina expanded a currency swap line with the People's Bank of...

We present a micro-founded monetary model of the world economy to study international currency competition. Our model features "unipolar" equilibria, with a single dominant international currency, and "multipolar" equilibria, in which multiple currencies circulate internationally. Long-run...

The recent period has seen an upsurge in predictions that the dollar's international dominance will at some point be challenged by a rival currency, notably the euro. This paper counters these predictions. It argues that the overestimation of the euro's ability to challenge dollar dominance is...

This study reviews new perceptions of an imminent decline of the international role of the US dollar and implications for the euro. It considers developments in international reserves, invoicing, debt and payment systems. Strengths and weaknesses of the US and euro area economies are discussed...

This study reviews new perceptions of an imminent decline of the international role of the US dollar and implications for the euro. It considers developments in international reserves, invoicing, debt and payment systems. Strengths and weaknesses of the US and euro area economies are discussed...

The recent period has seen an upsurge in predictions that the dollar's international dominance will soon be challenged by a rival currency, with the euro currently tipped as the leading contender. This paper counters these predictions. It argues that the overestimation of the euro's ability to...

Starting from the Plaza Agreement, which in 1985 proposed to regulate the functioning of the dollar standard, the international monetary system has experienced a series of evolutions following the collapse of the USSR, the development of globalization, culminating in the birth of the WTO and the...

Geopolitical frictions and high levels of uncertainty in US policy are driving countries to reduce dependence on the US dollar and implement new policies to promote their own currencies for settling cross-border trade. This Weekly Report analyzes the reactions of firms to such measures, focusing...

This paper examines the persistence and challenges of dollar supremacy in the international monetary system, from Bretton Woods to digital stablecoins. It highlights structural supports for dollar dominance, such as deep U.S. financial markets and commodity pricing, but also explores...

This paper examines the persistence and challenges of dollar supremacy in the international monetary system, from Bretton Woods to digital stablecoins. It highlights structural supports for dollar dominance, such as deep U.S. financial markets and commodity pricing, but also explores...

This study reviews new perceptions of an imminent decline of the international role of the US dollar and implications for the euro. It considers developments in international reserves, invoicing, debt and payment systems. Strengths and weaknesses of the US and euro area economies are discussed...

I examine how governments have managed their holdings of gold and dollar reserves in recent decades, a period when gold's share of aggregate international reserves rose and the dollar's share fell. Using data on central banks’ reserve currency composition and official sector purchases of U.S....

US dollar appreciations can inflict sizable negative cross-border spillovers. We investigate such spillovers from flight-to-safety shocks and the accompanying "global dollar cycle". Results show that negative real sector spillovers from US dollar appreciations fall disproportionately on emerging...

Amid the growing debate over how cryptocurrencies are reshaping global finance, this study explores the nexus between Bitcoin, Brent Crude Oil, Gold and the U.S. Dollar Index. We used a time-varying vector autoregressive (tvVAR) model to examine the connection among these four assets during the...

Available studies suggest that fiscal policy measures aimed at increasing disposable income growth may have an impact on inflation. As inflation in Montenegro in 2022 was higher compared to the euro area, several studies were conducted to estimate the impact of external and domestic inflation...

This study aims to analyze the spatial effects triggered by dollar liquidity by constructing a multidimensional spatial matrix that modifies the traditional monetary spatial framework. We utilized a three-level spatial econometric model (Spatial Lag, Durbin, and Generalized Nested Space) to...

A new mathematical structural model of the exchange rate and a new nonlinear multifactorial dependence of the exchange rate dynamics on a wide system of fundamental economic factors are the main results of the work. The model includes a wide system of economic factors based on the balance of...

This paper provides econometric evidence in support of the view that since President Trump's chaotic tariff announcements on Liberation Day, April 2, the dollar has switched from being a safe-haven currency that appreciates in times of market volatility to a "risk-on" currency that moves...

What can we learn from the high-frequency responses in bond and currency markets to the recent tariff announcement about the status of the U.S. dollar as the global reserve currency? The dollar depreciated by 6.5% after April 1 in spite of rising U.S. interest rates and market volatility, which...

The dominance of the U.S. dollar in the global financial system remains the key pillar of international trade and monetary stability but faces growing challenges in a rapidly changing world. Historically rooted in the Bretton Woods system and the establishment of the petrodollar system, the...

The paper discusses whether US dollar based financial sanctions will undermine the dollar's dominant international role. Despite long-standing attempts to reduce the role of the dollar, these have had limited success so far. I discuss why this is the case and why alternatives to the dollar are...

This paper documents a new dollar channel that transmits monetary policy across borders. Exploiting unique features of the syndicated loan market for identification, we show that changes in the euro-dollar exchange rate around ECB monetary policy announcements that are orthogonal to simultaneous...

This paper documents a new dollar channel that transmits monetary policy across borders. Exploiting unique features of the syndicated loan market for identification, we show that changes in the euro-dollar exchange rate around ECB monetary policy announcements that are orthogonal to simultaneous...

Modern monetary theory argues that all governments that issue their own currency have the same policy space. The present paper argues that this position is wrong. For it to be valid, abstraction must be made from the gravitational force of the US dollar that stems from its backing mass of...