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On the Determinants of Currency Internationalization: Implications for Korean Won Internationalization (in Korean)

Author

Listed:
  • Suk Hyun

    (International Finance Team, Korea Capital Market Institute)

  • Sangheon Lee

    (International Finance Team, Korea Capital Market Institute)

Abstract

This study empirically examines the determinants of currency internationalization with ordered logit model, classifying the currency internationalization into partial and full currency internationalization. The major empirical findings are as follows. First, GDP, trade share, stock market valuations/GDP, issuance ratio of international bonds, and financial openness positively impact currency internationalization. Second, trade dependence and inflation are negatively correlated with currency internationalization. We calculate the probability of Korean won internationalization as 60 percent from the estimated results, however, if international bond issuance denominated in Korean won increases to a level similar to Australia's, the probability of Korean won internationalization rises to 85 percent.

Suggested Citation

  • Suk Hyun & Sangheon Lee, 2013. "On the Determinants of Currency Internationalization: Implications for Korean Won Internationalization (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 19(1), pages 43-75, March.
    • Handle: RePEc:bok:journl:v:19:y:2013:i:1:p:43-75
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    More about this item

    Keywords

    Currency internationalization; full internationalization; partial internationalization; capital market conditions; financial openness;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance

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