The Currency Denomination of World Trade after European Monetary Union

Hartmann, Philipp

doi:10.1006/jjie.1998.0417

Cited by 29 publications

(18 citation statements)

References 38 publications

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“…International use of the euro has grown by other criteria as well. About half of euroland trade with non‐euro area residents is invoiced in the new currency (Hartmann 1998). The euro's share in international debt securities rose to above 30% (versus below 20% for the pre‐1999 legacy currencies) 10 .…”

Section: International Use Of the Euro So Farmentioning

confidence: 99%

Why the Euro Will Rival the Dollar^*

Chinn¹,

Frankel

2008

International Finance

130

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Section: International Use Of the Euro So Farmentioning

confidence: 99%

Why the Euro Will Rival the Dollar^*

Chinn¹,

Frankel

2008

International Finance

130

View full text Add to dashboard Cite

“…According toBekx (1998), 80% of U.S. imports are priced in dollars, while the fraction of imports priced in local currency is around 40% in other large developed countries. For a survey of the currency denomination in international trade, seeHartmann (1998).…”

mentioning

confidence: 99%

State dependent pricing, invoicing currency, and exchange rate pass-through

Flodén

Wilander

2006

Journal of International Economics

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“…30 26 The most recent annual report from the European Central Bank (2003), from which these statistics come, cites data through mid-2003. 27 Hartmann (1998) predicted that the share of the euro in trade invoicing would gradually increase, though starting out a distant second place to the dollar globally. 28 To compare foreign exchange trading volume in the euro with volume in its predecessor currencies, one must allow for the disappearance of intra-euro12 trading, as in the Detken and Hartmann's (2002, p. 558-559) "simple arithmetic of EMU."…”

Section: Factors That Suit a Currency For International Currency Statusmentioning

confidence: 99%

Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?

Chinn¹,

Frankel²

2005

120

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Might the dollar eventually follow the precedent of the pound and cede its status as leading international reserve currency? Unlike ten years ago, there now exists a credible competitor: the euro. This paper econometrically estimates determinants of the shares of major currencies in the reserve holdings of the world's central banks. Significant factors include: size of the home country, inflation rate (or lagged depreciation trend), exchange rate variability, and size of the relevant home financial center (as measured by the turnover in its foreign exchange market). We have not found that net international debt position is an important determinant. Network externality theories would predict a tipping phenomenon. Indeed we find that the relationship between currency shares and their determinants is nonlinear (which we try to capture with a logistic function, or else with a dummy "leader" variable for the largest country). But changes are felt only with a long lag (we estimate a weight on the preceding year's currency share around .9). The advent of the euro interrupts the continuity of the historical data set. So we estimate parameters on pre-1999 data, and then use them to forecast the EMU era. The equation correctly predicts a (small) narrowing in the gap between the dollar and euro over the period [1999][2000][2001][2002][2003][2004]. Whether the euro might in the future rival or surpass the dollar as the world's leading international reserve currency appears to depend on two things: (1) do the United Kingdom and enough other EU members join euroland so that it becomes larger than the US economy, and (2) does US macroeconomic policy eventually undermine confidence in the value of the dollar, in the form of inflation and depreciation. What we learn about functional form and parameter values helps us forecast, contingent on these two developments, how quickly the euro might rise to challenge the dollar. Under two important scenarios the remaining EU members, including the UK, join EMU by 2020 or else the recent depreciation trend of the dollar persists into the future the euro may surpass the dollar as leading international reserve currency by 2022. Might the dollar lose its status as unrivaled international reserve currency? Could it be "going the way of sterling, the guilder, the ducat and the bezant." 1 Some authors argued as much ten years ago. 2 The international use of the yen and mark had risen rapidly in the 1970s and 1980s, reducing the share of the dollar. (See Table A or Figure 7.) Some in the early 1990s suggested that the yen or mark might eventually overtake the dollar as the lead international currency. Menzie Chinn Department of EconomicsBy the turn of the millennium, that idea had come to sound far-fetched. In the meantime, both Japan and Germany had undergone a decade of remarkably low economic growth, the yen had declined, and the mark had disappeared altogether. Fears that the international currency status of the dollar was under challenge were premature, as should have been obvious ...

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The Currency Denomination of World Trade after European Monetary Union

Cited by 29 publications

References 38 publications

Why the Euro Will Rival the Dollar^*

Why the Euro Will Rival the Dollar^*

State dependent pricing, invoicing currency, and exchange rate pass-through

Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?

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The Currency Denomination of World Trade after European Monetary Union

Cited by 29 publications

References 38 publications

Why the Euro Will Rival the Dollar*

Why the Euro Will Rival the Dollar*

State dependent pricing, invoicing currency, and exchange rate pass-through

Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?

Contact Info

Product

Resources

About

Why the Euro Will Rival the Dollar^*

Why the Euro Will Rival the Dollar^*