description: foreign currency held by monetary authorities as part of forex reserves
234 results
by Tim Lee, Jamie Lee and Kevin Coldiron · 13 Dec 2019 · 241pp · 81,805 words
conclusion is that the greater liquidity and breadth of financial instruments in the US markets, as well as the dollar’s role as the global reserve currency, has placed the US markets, and specifically the S&P 500 index, at the center of the global carry trade. A further purpose of the
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market volatility. Given the increasing dominance of the dollar as the carry funding currency of choice, along with its role as the world’s major reserve currency, a further, crucial, element of the picture has been the US Federal Reserve’s liquidity swap arrangements with other central banks and the Fed’s
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trades, and volatility selling trades in general, then it would be unlikely that this regime could exist with the dollar as the predominant funding and reserve currency without the Fed’s underwriting of it via liquidity swaps. To illustrate, we can return to an example used earlier in the book, of a
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, the centrality of the US economy and its financial markets has become ever more obvious. The dollar, the The Globalization of Carry 201 world’s reserve currency, has become the dominant funding currency for the global currency carry trade, its role entrenched further by the willingness of the US Federal Reserve to
by Tamim Bayoumi · 405pp · 109,114 words
’Estaing) of being able to issue dollar assets at low cost because of the additional demand for US assets coming from its status as a reserve currency. Soon after, the devaluation of the pound sterling intensified doubts about the dollar peg against gold and the pool was forced to sell $800 billion
by William Baker and Addison Wiggin · 2 Nov 2009 · 444pp · 151,136 words
central bank reserves, 40 ENDLESS MONEY depending upon which currency or trading block in which they operated. From the perspective of the operator of the reserve currency, this simultaneously discouraged citizens from demanding gold in return for dollars, and it injected a cumbersome intermediate step before foreign currencies might be subject to
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a reserve base underneath foreign money supplies instead of silver. Seigniorage as well as control over financial affairs would accrue to the issuer of the reserve currency, the United States or Britain, and their client states would be subservient. The idea was to replace a genuine gold standard, in which each country
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a general strike in 1926. Cultural rejection of deflation clearly undermined resumption of the gold standard by Britain, and its custodianship of the world’s reserve currency. Britain had allowed its share of world gold reserves to recede to 6 percent, a far cry from Russia (21%), France (17%), the United States
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Nixonian era ushered in the adoption of a purely paper-based pyramid of banking and foreign exchange established upon the dollar as the world’s reserve currency. This would grease the skids for accelerated and completely unchecked leveraging of the banking system, securitization, and derivatives creation. Now that precious metals have been
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would injure or impoverish themselves. In a larger sense, the fixation the economics community has with fiat money and its blind spot for a commodity-reserved currency expresses Flat-Earth Economics 105 our cultural shift to reject absolutes and self-discipline and to defer consequences, financial or otherwise—an adolescent mindset. Gold
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is nothing much we can do.” Who benefits? Like Germany of the 1930s, the United States does, because being the operator of the world’s reserve currency, even if the creditor nations pull out of the dollar or other perhaps equally inflated paper currencies, it can make one last withdrawal of seigniorage
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from its money supply by monetizing it. But the cost would be the loss of operating the world reserve currency. Gao Xiqing continues, “‘If China has $2 trillion, Japan has almost $2 trillion, and Russia has some, and all the others, then—let’s throw
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would continue to be used for legal tender domestically. But instead in the April 2009 G-20 meeting the idea was floated that a new reserve currency might be constructed using a basket of currencies including the ruble and the yuan. Such rumination again reflects complete misunderstanding of the credit crisis, for
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of cash not produce some tremendous effect? If the answer is truly “no,” then why not double it again? In reality, this ballooning quantity of reserve currency dollars was a base upon which other countries could pyramid loans, repeating the pattern seen when the classical gold standard was liberalized under the tutelage
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differences between the United States and Argentina that would cause business cycles to behave differently, the most often acknowledged being our having the world’s reserve currency. For some time the latter country pursued autarkic policies (restraining imports in particular), and these complimented labor-friendly laws that resulted in rigidly high real
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holdings to gold (and not other currencies). It could be that another country, such as Switzerland, might seize the opportunity to operate a new highlevel reserve currency. Or, countries such as Japan or the United States might suffer extreme economic contraction from the sharp appreciation of their currencies in the floating foreign
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not still be able to capitalize upon its position as the strongest country in the world, even if it lost control of the world’s reserve currency. If a consensus between the Fed and the Treasury could be reached, federally chartered banks might back the dollar with gold again, or the issuance
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currencies and have been universally lax with spending, debt, and entitlement programs. Unlike the United States, they do not enjoy the status of being the reserve currency of choice for other nations. A shove from the globalization of the credit crisis might trigger devaluations, runaway inflation, or national defaults. The success of
by Michel Aglietta · 23 Oct 2018 · 665pp · 146,542 words
as responsible for the asymmetries. For the Europeans, and above all for the Germans, the system’s asymmetry owed to the dollar’s status as reserve currency. For the Germans, the rise in global inflation was the proof that imbalances were not to be treated symmetrically. There were thus no grounds for
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structure of national economies’ international indebtedness. Founded on a national currency, today’s monetary architecture attributes an ‘exorbitant privilege’ to the country that issues the reserve currency.32 This is because it allows it to import products and financial assets without giving anything back to the rest of the world in exchange
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sector. All this implies the need to develop financial asset markets. The second priority is to promote the yuan to the level of an international reserve currency by 2020, thus making it fully convertible. This priority forms part of China’s shifting geopolitical strategy. During the high-growth period in which China
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openness – as was the case in all the countries that liberalised their financial systems before it – as economic reform progresses, the yuan will become a reserve currency. The IMF will be driven to give the yuan official validation as it develops its statutes, leading it to attribute more weight to emerging countries
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cast asunder by World War One. The accords culminated in the advocacy of a gold exchange standard in which sterling and the dollar were the reserve currencies substituting for gold. For the first time, the dollar rose to the status of an international currency. 6 The Treaty of Versailles, signed on 28
by Nouriel Roubini and Stephen Mihm · 10 May 2010 · 491pp · 131,769 words
—be resolved in an orderly or a disorderly way? Could the U.S. dollar crash, and if so, what would replace it as a global reserve currency? What role can a reformed IMF play in reducing global monetary distortions and financial crises? And should the IMF become a true international lender of
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option of redeeming them for U.S. gold at the price of thirty-five dollars an ounce. In effect, the dollar became the world’s reserve currency, while the United States alone remained on a gold standard in its dealings with other countries. Thus began a remarkable—and extraordinarily anomalous, given the
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. The United States was the world’s biggest creditor and net lender by running current account surpluses, and the dollar had just become the global reserve currency. Little wonder it was able to pay down its debt with ease. Whether the same can happen today is another question. Much of the country
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major geopolitical shift. For many decades the United States enjoyed international political and economic hegemony, thanks in part to the dollar’s role as a reserve currency for the rest of the world. But over the last twenty years the United States has increasingly spent more than it has produced and earned
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States enjoys what Valéry Giscard d’Estaing, the French minister of finance in the early 1960s, called the “exorbitant privilege” of having the world’s reserve currency. Surely, the reasoning goes, this will forestall the sort of currency crises that plague less fortunate countries. Given these advantages, the United States should be
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late 1950s the United States was at the peak of its power. It ran a current account surplus, and the dollar served as the international reserve currency. Under the famed Bretton Woods agreement, signed shortly before the end of World War II, other nations made their currencies convertible into dollars at certain
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he spoke against the idea of having one nation’s currency simultaneously serve as an international reserve currency. Such an arrangement, he warned, contained the seeds of its own destruction. Triffin observed that nations that issue reserve currencies—Britain in the nineteenth century, the United States in the twentieth—generally maintain current account surpluses
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that more dollars flowed into the country than flowed out. So far, so good. But other countries, Triffin pointed out, would need to hold the reserve currency. The resulting demand for dollars would create a countervailing force, causing dollars to flow out of the United States. Those pressures, Triffin argued, would eventually
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dollars into gold. Triffin’s Dilemma remains relevant today. The dollar is no longer convertible into gold, but it remains the world’s de facto reserve currency, even as that demand contributes to ever-greater global imbalances. Some economists have claimed that this arrangement—the so-called “Bretton Woods II” system—can
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supremacy, though only with the Suez Crisis of 1956—and the further collapse of the pound sterling—did the dollar become the world’s unrivaled reserve currency. The fall of the pound took three-quarters of a century, and we may reasonably hope that the dollar’s decline will also proceed at
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, and exists in minute quantities relative to the present size of the global economy. None of these features make it a good candidate for a reserve currency. That said, if governments resort to monetizing their deficits, triggering higher inflation, gold could rise sharply in price. But should that happen, central banks would
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the pound sterling a century ago—reflects the dollar’s real and symbolic status as the international reserve currency. If the yuan gains widespread acceptance in the world’s account books, the dollar will see its reserve-currency status usurped. For now, however, the renminbi faces an uphill battle to become the world’s
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-denominated debt. Though the Chinese clearly want a greater role for the renminbi, they don’t seem eager for it to become the world’s reserve currency anytime soon. In 2009 Zhou Xiaochuan, governor of the People’s Bank of China, proposed something very different: a new, supra-sovereign currency that would
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not the same as wanting to run the show. In fact, Zhou cited Triffin’s Dilemma in forcefully arguing for the creation of “an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit
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its value from a basket of some thirty underlying commodities. The Americans rejected the idea and pushed for the dollar to become the world’s reserve currency. Zhou criticized that fateful step as misguided. Keynes, he claimed, had been “far-sighted,” and the SDR might be a way of resurrecting his ideas
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. For now, the idea of turning the SDR into a global reserve currency remains fanciful. A significant number of private and public parties would have to use it as a unit of account, and so far there’s
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of emerging-market economies as part of their reserves. In the short term, this won’t threaten the role of the dollar as the major reserve currency; the U.S. dollar has no clear alternatives. But if the United States keeps running large twin deficits—or worse, starts to monetize its fiscal
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deficit—the resulting high inflation will accelerate the decline of the U.S. dollar as a major reserve currency, with unpredictable results. Let’s assume that the United States doesn’t go down that road, and that the reforms we’ve described can bring
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requires a new commitment to international economic governance. The IMF must be strengthened and given the power to supply the makings of a new international reserve currency. And how the IMF governs itself must be seriously reformed. For too long, a handful of smaller, aging economies have dominated IMF governance. Emerging economies
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, London, October 7, 2004, online at http://www.321gold.com/editorials/persaud/persaud101204.html; Barry Eichengreen, “Sterling’s Past, Dollar’s Future: Historical Perspectives on Reserve Currency Competition,” Tawney Lecture, Economic History Society, Leicester, U.K., April 10, 2005, online at http://www.econ.berkeley.edu/~eichengr/research/tawney_lecture2apr29-05.pdf
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/116, May 2009. Online at http://www.imf.org/external/pubs/ft/wp/2009/wp09116.pdf. ____. “Sterling’s Past, Dollar’s Future: Historical Perspectives on Reserve Currency Competition.” Tawney Lecture delivered to the Economic History Society, Leicester, U.K. April 10, 2005. Online at http://www.econ.berkeley.edu/~eichengr/research/tawney
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Dexia discount window discredit (revulsion) dollar, U.S. in Bretton Woods system carry trade in decline of depreciation of future of purchasing power of as reserve currency swap lines and value of double agency conflict Dubai Dubai Ports World Dubai World dynamic provisioning Eastern Europe see also specific countries economic crises, see
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(Ginnie Mae) Gramlich, Edward Gramm, Phil Gramm-Leach-Bliley Act (1999) Grant, James Grant Street National Bank Great Britain banks in empire of panics in reserve currency of Great Contraction Great Depression Austrian School’s view of deflation and deposit insurance in economic collapse in financial crisis (2008) compared with Fisher’s
by Marcia Stigum and Anthony Crescenzi · 9 Feb 2007 · 1,202pp · 424,886 words
that the government would default on them. Third, interest income on governments is exempt from state taxation. Fourth, because the U.S. dollar remains the reserve currency in the global financial system, the Treasury market is truly a global market. Because of these advantages, bills and governments having a short current maturity
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as just the City, is and has been since the nineteenth century the financial capital 9 Gabriele Galati and Philip Wooldridge, “The Euro as a Reserve Currency: A Challenge to the Pre-Eminence of the U.S. Dollar?” The Bank for International Settlements, BIS Working Papers, October 2006. FIGURE 7.7 U
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of Foreign Central Banks Foreign central banks hold short-term balances of dollars for a number of reasons. One is that the dollar is a reserve currency, a currency that foreign central banks hold, instead of or in addition to gold, as part of their foreign-exchange reserves. Also, when the dollar
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conditions. Probably the most important reason why Treasuries are so actively traded throughout the world is that the U.S. dollar is the world’s reserve currency. As such, with much of world trade denominated in dollars, the world’s central banks as well as many private investors have dollars to invest
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investors, despite the added cost. A major motivation for holding U.S. securities over Eurodollar securities is the dollar’s status as the world’s reserve currency. When countries earn dollar reserves, they tend to invest these dollars in securities issued in the United States, most particularly U.S. Treasuries, federally related
by Philip Coggan · 1 Dec 2011 · 376pp · 109,092 words
gold, but not convertible into it. This device was Keynes’s way of trying to reduce the world’s dependence on the dollar as a reserve currency. (Bancor stayed on the drawing board. Eventually, a basket currency was to be created in 1969 in the form of the Special Drawing Right (SDR
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initial performance of the euro on the currency markets did not inspire that much confidence either. Far from challenging the dollar as the new global reserve currency, the euro steadily lost value, dropping from around $1.18 as an initial value in 1999 to be worth just 82 cents in October 2000
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of the discussion concerns whether the US dollar will be replaced as the global reserve currency by the Chinese renminbi, or whether it will simply be one of a range of reserve currencies including the euro, renminbi and yen. The global reserve currency is the currency that forms the biggest proportion of the holdings of central
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haven despite the country’s fiscal problems. After all, sterling was still being used as a reserve currency in the mid-twentieth century long after Britain’s relative economic decline had become apparent. The choice of reserve currency involves many factors. The US’s political, military and economic pre-eminence have undoubtedly boosted the
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if the dollar steadily falls in value against the renminbi, as seems likely, it will still have attractions as a reserve currency. Indeed, currency depreciation goes with the territory of being a reserve currency. In a sense, this dates back to the Triffin dilemma outlined in Chapter 5: for a currency to be used
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the safety of China’s dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.’ Despite the rhetoric, an outright Chinese abandonment of the dollar is
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, Ayn Reagan, Ronald real bills theory real interest rates Record, Neil Reformation, the Reichsbank Reichsmark Reid, Jim Reinhart, Carmen renminbi Rentenmark rentiers reparations Republican Party reserve currency retail price index retirement revaluation Revolutionary War Ridley, Matt Roberts, Russell Rogoff, Kenneth Romanovs Roosevelt, Franklin D. Rubin, Robert Rueff, Jacques Rumsfeld, Donald Russia Sack
by Markus K. Brunnermeier, Harold James and Jean-Pierre Landau · 3 Aug 2016 · 586pp · 160,321 words
in the existing international monetary system. In France, by contrast, there was a long-standing suspicion of the US role as issuer of the global reserve currency (that went back to General de Gaulle’s famous criticism of the US dollar). Consequently, French leaders wished that Europe could create a currency that
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Germany that successfully blocked a proposal in October 1994 at the annual IMF meeting in Madrid to undertake a general issue of the IMF’s reserve currency, the special drawing right (SDR). As the Germans argued, there was no evidence of a general liquidity shortage that was the condition in the IMF
by Steven Drobny · 18 Mar 2010 · 537pp · 144,318 words
rather than buying until prices adjust. What about the U.S. dollar—is the dollar’s status as the world’s reserve currency on the wane? The idea that the dollar’s reserve currency status is disappearing is something I used to believe in, but now I am not so sure. In order for
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not let nebulous long-term economic consequences get in the way. What are your thoughts on the status of the dollar as the world’s reserve currency? The dollar is certainly challenged, and will remain so for a number of reasons. A better longer-term solution for the world is probably more
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than one reserve currency. But unless the U.S. really mismanages things from here, the dollar will remain the world’s number one reserve currency 5 and 10 years down the road. It just might not enjoy such a wide
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do not have a magic formula. That is just the way it is. So are the following questions irrelevant to you: is the dollar’s reserve currency status on the decline? Will China be the next superpower? Will the world run out of oil? They are not irrelevant. They are very interesting
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also has a history as a currency, so its recent popularity is understandable. So is the U.S. dollar’s role as the world’s reserve currency in question? I have conflicting views on the dollar. On one hand, I can see the fundamental arguments for its status to erode gradually over
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—which pretty much all reserve managers have been doing—but also their stock. My counter to that focuses on something very basic: you hold a reserve currency ultimately for precautionary reasons, i.e., safety. One source of safety is obviously economic fundamentals, institutional credibility, and all that. Another underreported source, however, is
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the euro currency at some point in the future. That is, assuming that the euro remains in its present form as the world’s second reserve currency. What was the worst trade of your career? The worst trade of my career was not a commodity trade but an equity trade. I lost
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year. China also presents a clear challenge to the U.S. dollar as the world’s reserve currency for the first time since World War II. Although the Chinese renminbi will not become the sole reserve currency, it will become a major tradable currency and could eventually become an important part of a world
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reserve currency basket. A clear concern is the structural flaw in the global monetary system, whereby the U.S
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-1923) Relative performance, inadequacy Reminiscences of a Stock Operator (Lefèvre) Renminbi (2005-2009) Repossession property levels Republic of Turkey examination investment rates+equities (1999-2000) Reserve currency, question Resource nationalism Returns forecast generation maximization momentum models targets, replacement Return-to-worst-drawdown, ratios (improvement) Reward-to-variability ratio Riksbank (Sweden) Risk amount
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(1922-1936) trade deficit, narrowing yield curves (2004-2006) University endowments losses impact unlevered portfolio U.S.-centric equity portfolio U.S. dollar China, challenge reserve currency status decline role status U.S. equities annualized returns/volatility overpricing U.S. equity centric portfolio (protection), foreign currency diversification (usage) U.S. government budget
by James Rickards · 15 Nov 2016 · 354pp · 105,322 words
conundrum was posed by Belgian economist Robert Triffin in testimony to the U.S. Congress in 1960. Triffin observed that the issuer of a global reserve currency had to run persistent deficits to supply the world with sufficient reserves for normal trade. Yet a nation that runs deficits long enough goes broke
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. In this context, going broke means trading partners lose confidence in the stable value of the reserve currency and reject it in favor of alternatives. SDRs solve this problem because the issuer, the IMF, is not a country and does not run deficits
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, euros, yen, and sterling. This decision was purely political. The yuan did not meet the criteria for a true reserve currency and is unlikely to meet them for at least a decade. A reserve currency requires a deep, liquid sovereign bond market, with hedging instruments, repo financing, settlement and clearing facilities, and a good
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years just to address global warming. … With the US, the issuer of the world’s preeminent reserve currency, unwilling or unable to provide the liquidity needed to close the infrastructure investment gap, a new supplementary reserve currency should be instituted—one whose issuer does not have to confront the Triffin dilemma. This leaves one
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collapse that moved in what seemed slow motion was the fall of sterling and the rise of the U.S. dollar as the dominant global reserve currency. Ratification of the Final Act of the Bretton Woods conference on December 27, 1945, is seen as a convenient date to mark the moment the
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private bank owners. Sterling’s role from 1914 to 1944 was a façade. The fact that London remained a financial center, and sterling remained a reserve currency, had more to do with Britain’s captive market in the British Empire, and the sufferance of anglophile bankers at J. P. Morgan, than with
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intrinsic strength. Scholar Barry Eichengreen brilliantly laid out this transition and the seesaw struggle between the dollar and sterling for the global reserve currency crown in the interwar years in his book Golden Fetters. Sterling lost reserve status de facto in 1914, yet the world did not see the
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in the Treasury note example, shocks in the world’s safest bond. Swiss francs, euros, pounds sterling, and the U.S. dollar are all major reserve currencies. The yuan is less freely convertible, but is still the fifth most actively traded currency in the world and, as of October 1, 2016, one
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: Xiao Geng and Andrew Sheng, “How to Finance Global Reflation,” Project Syndicate, April 25, 2016, accessed August 7, 2016, www.project-syndicate.org/commentary/sdr-reserve-currency-fight-deflation-by-andrew-sheng-and-xiao-geng-2016-04. Naomi Klein’s 2007 book, The Shock Doctrine: Naomi Klein, The Shock Doctrine: The Rise
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