Reserve currencies: Can multiplicity work?

Satyendra Gupta and Ashima Goyal

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: The paper analyzes the potential rise of new reserve currencies in the context of the economic and political determinants of an international currency. Two models analyze the role of soft political power, switching costs to a new currency and transaction costs in the rise of a new currency. Quantitative indices are developed to measure these factors, which are then empirically tested and found to be statistically significant in determining the rise of international currency. The study further explores the greater use of Renminbi in East Asia and the trade integration in this region.

Keywords: Reserve currencies; network benefilts; transaction costs; bargaining power; Renminbi (search for similar items in EconPapers)
JEL-codes: F33 F55 O53 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-03
New Economics Papers: this item is included in nep-mon and nep-sea
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Related works:
Working Paper: Reserve Currencies: Can Multiplicity Work? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2014-010

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