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International Liquidity in a Multipolar World

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  • Barry Eichengreen

Abstract

Today's global monetary and financial system, to a remarkable extent, continues to rely on the U.S. dollar for international liquidity. This reflects the currency's historic role, the liquidity of American financial markets, and the absence of alternatives. But with the emergence of emerging markets, the capacity of the United States to provide safe assets will be outstripped by the growth of international transactions. It is thus likely that other large economies, presumably Europe and China, will eventually join the United States as sources of international liquidity and that other currencies will come to share the dollar's reserve-currency status.

Suggested Citation

  • Barry Eichengreen, 2012. "International Liquidity in a Multipolar World," American Economic Review, American Economic Association, vol. 102(3), pages 207-212, May.
    • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:207-12
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.3.207
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    References listed on IDEAS

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    1. Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133.
    2. Menzie D. Chinn & Jeffrey A. Frankel, 2008. "The Euro May Over the Next 15 Years Surpass the Dollar as Leading International Currency," NBER Working Papers 13909, National Bureau of Economic Research, Inc.
    3. Eichengreen, Barry, 2012. "Exorbitant Privilege: The Rise and Fall of the Dollar," OUP Catalogue, Oxford University Press, number 9780199642472.
    4. Edwin M. Truman, 2008. "On What Terms Is the IMF Worth Funding?," Working Paper Series WP08-11, Peterson Institute for International Economics.
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    Cited by:

    1. Galina Hale & Peter Jones & Mark M. Spiegel, 2014. "The Rise in Home Currency Issuance," Working Paper Series 2014-19, Federal Reserve Bank of San Francisco.
    2. Hale, Galina B. & Jones, Peter C. & Spiegel, Mark M., 2020. "Home currency issuance in international bond markets," Journal of International Economics, Elsevier, vol. 122(C).
    3. Peijie Wang & Ping Wang, 2024. "Emerging influence of the RMB on currency markets in a transpiring tri‐polar international monetary system," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 443-464, January.
    4. Subacchi, Paola, 2013. "Expanding Beyond Borders: The Yen and the Yuan," ADBI Working Papers 450, Asian Development Bank Institute.

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