China's Dominance Hypothesis and the Emergence of a Tri-polar Global Currency System

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in WO R K I N G PA P E R S E R I E S N O 1 3 9 2 / O C TO B E R 2 011by Marcel Fratzscher and Arnaud Mehl Abstract 4 Non-technical summary 5 CHINA'S DOMINANCE HYPOTHESIS AND THE EMERGENCE OF A TRI-POLAR GLOBAL CURRENCY SYSTEM WO R K I N G PA PE R S E R I E S N O 139 2 / O C TO B E R 2011 CHINA'S DOMINANCE HYPOTHESIS AND THE EMERGENCE OF A TRI-POLAR GLOBAL

China's Economic Growth and Rebalancing

“…Finally, a more flexible exchange rate could make a significant contribution to the orderly unwinding of global imbalances, also indirectly via the de facto role which the renminbi plays as a shadow anchor currency in Asia. Evidence indeed suggests that after 2008 other Asian countries maintained their competitiveness against China by implicitly pegging their currencies to the renminbi (Fratzscher and Mehl (2011)). Consequently, China's exchange rate policy has widespread effects on exchange rate developments in the whole emerging Asian region (see Chart 25).…”

Exchange rate linkages between the ASEAN currencies, the US dollar and the Chinese RMB

“…Indeed, recent studies have found that the latter has acquired an increasingly important role in driving the region's currencies (e.g., Chen et al, 2010;Henning, 2012;Fratzscher and Mehl, 2014), or have even suggested that a RMB bloc has already been formed (e.g., Subramanian and Kessler, 2012). …”

The Structural Behavior of China-U.S. Trade Flows

“…13 See, for example Fratzscher and Mehl (2014), McKinnon and Schnabl (2003), Subramanian and Kessler (2013). Note: Columns (1) and (4), Columns (2) and (5), and Columns (3) and (6) report results when the RER variable is the CPI based RER, the one from the two-stage estimation method, and the deviation from the equilibrium levels.…”