This article analyses the relationships among the unit of account and means of exchange functions of an international currency, on the one hand, and its store of value in official use, on the other ...hand. Historical evidence links the currency composition of reserves to currency movements. The currency composition of reserves is strongly related in the cross-section to both currency movements and the currency denomination of trade. Data limitations make it hard to distinguish these two factors. A panel analysis of 5 countries from central and Eastern Europe shows that both trade invoicing and currency movements drive changing official reserve composition. Implications are suggested for the prospects for the renminbi enlarging its current small portion of official foreign exchange reserves.
La gestion du renminbi depuis 2005 Ma, Guonan; McCauley, Robert N
Revue d'économie financière,
2011, Letnik:
102, Številka:
2
Journal Article
Recenzirano
Odprti dostop
Selon une opinion généralement admise, depuis la mi-2005, le cours de change du renminbi témoignerait, peu ou prou, d’un ancrage (avec glissement) de la monnaie chinoise au dollar américain. Les ...auteurs de l’article estiment, au contraire, que les autorités chinoises ont opéré une transition pour s’éloigner d’un glissement – ou d’une stagnation – par rapport au dollar, qu’elles ont, à tout le moins, tenté une expérience prolongée de gestion par rapport à un panier de monnaies au cours de la période 2006-2008. Le taux de change bilatéral du dollar n’est pas représentatif de la gestion du renminbi depuis 2005, celui du DTS l’est davantage, l’indice effectif calculé par la BRI étant le plus représentatif. Le cours euro/renminbi, quant à lui, rend compte des variations sur une plus longue période, allant de juin 2005 à décembre 2010. De plus, le cours nominal ne résume pas, à lui seul, la politique de change de la Chine. Les prix ayant augmenté plus rapidement en Chine que chez ses partenaires commerciaux, l’appréciation du renminbi entre juin 2005 et décembre 2010 a été quelque 10 % plus forte en termes réels qu’en termes nominaux. Et d’ailleurs, la hausse réelle de la monnaie chinoise par rapport à l’euro était représentative des fluctuations plus larges du renminbi. Classification JEL : F31, O53, P33, P34.
•EM currencies’ RMB co-movements vary with RMB management since August 2015.•RMB management places varying weight on market moves and major currency moves.•The RMB and EM currencies co-move more when ...basket management of the RMB is stronger.•Depending on RMB management, “RMB bloc” may be premature.
This study investigates how variation in Chinese authorities’ renminbi management since the August 2015 exchange rate reform maps onto variation in the co-movement between the renminbi with regional and other emerging market currencies. We first identify three post-reform periods of RMB management: transition, basket management and countercyclical management. Across these periods, the reaction of the official “fixing” rate to market movements differed significantly. The co-movement with regional and Latin American currencies peaked in the basket period, when the management was most multilateral, making it possible to discern a renminbi zone in this period. By contrast, the decline in co-movement in the countercyclical management period since May 2017 leaves it premature to speak of a renminbi bloc. The dependence of the co-movements on renminbi management has important implications for renminbi internationalisation.
The Chinese authorities described the management of the renminbi after its 2005 unpegging from the US dollar as involving a basket of trading partner currencies. Outside analysts have detected few ...signs of such management. We find that, in the 2
years from mid-2006 to mid-2008, the renminbi strengthened gradually against trading partners’ currencies within a narrow band. In mid-2008, the financial crisis interrupted this experiment and the bilateral renminbi/dollar exchange rate stabilised at 6.8. The 2006–2008 experience suggests that a shared policy of gradual nominal effective appreciation renders East Asian currencies quite stable against one another. Such a shared policy would create favourable conditions for regional monetary cooperation.
•Official Japanese dollar purchases in 2003–04 lowered global bond yields.•Weekly Fed custody data connect Japanese intervention to US bond purchases.•Our results support a portfolio balance effect ...in a globally integrated bond market.•Our results resemble those of studies of Federal Reserve large-scale bond purchases.•We focus clearly on portfolio shifts that do not signal monetary policy changes.
This paper extends the analysis of Bernanke et al. (2004) to show that the official Japanese purchases of foreign exchange in 2003–04 seem to have lowered long-term interest rates not only in the United States, but in a wide range of countries, including Japan. It seems that this decline was triggered by the investment of the intervention proceeds in US bonds and that global portfolio rebalancing spread the resulting decline in US dollar yields to bond markets in other currencies, thus easing global monetary conditions. We also show that the global portfolio balance effect is detectable in the response of yields to large Japanese intervention in data before and after 2003/04, though the effect is weaker. While our findings contribute to a growing body of work that points to common responses across bond markets to official portfolio shifts in the form of large-scale bond purchases (“quantitative easing”), our analysis has the advantage of focusing on a pure portfolio shock.
•The dollar zone covers 60% of the global economy despite euro zone expansion.•Surpluses in the rest of the dollar zone offset US current account deficits.•Dollar zone current account neared zero ...before Great Financial Crisis (GFC).•Since GFC, imbalances have narrowed within but not across zones.•The renminbi as a key currency would worsen the dollar zone current account.
This study divides the world into currency zones according to the co-movement of each currency with the key currencies. The dollar zone groups economies that produce well over half of global GDP. The euro zone now includes almost all of Europe and some commodity producers, but remains less than half the size of the dollar zone. The dollar zone share has shown striking stability despite big shifts across zones over time. These include the demise of the sterling zone and the expansion of the DM/euro from northwestern Europe to Europe and beyond.
Global imbalances look very different from a currency perspective. In the 2000s, the dollar zone’s current account improved and became more or less balanced around the time of the Global Financial Crisis (GFC), even as the US current account plumbed all-time lows. The dollar zone’s net international investment position was also balanced around the time of the GFC. Thus, neither flow nor stock readings on the dollar zone support widespread predictions in the early 2000s of an imminent dollar crash. In fact, most of the secular widening of current accounts occurred within currency zones, where by construction investors bear relatively limited currency risk.
Our account of the dollar’s dominance rests not on the US economy’s size but rather on the size of the zone with limited currency risk vis-a-vis the dollar. In such a world, the rise of another large economy poses the question not of relative size but rather of re-alignment of third currencies. What if the renminbi becomes a key currency alongside the dollar and the euro? Already some emerging market currencies are co-moving with the renminbi against the dollar. On current evidence, a renminbi zone would shrink the dollar zone, and widen its current account deficit.
Global dollar credit McCauley, Robert N.; McGuire, Patrick; Sushko, Vladyslav ...
Economic policy,
04/2015, Letnik:
30, Številka:
82
Journal Article
Recenzirano
Since the global financial crisis, banks and bond investors have increased the outstanding US dollar credit to non-bank borrowers outside the United States from $6 trillion to $9 trillion. This ...increase has implications for understanding global liquidity and monetary policy transmission. We analyse the links between US monetary policy, leverage and flows into bond funds, on the one hand, and dollar credit extended to non-US borrowers, on the other. Prior to the crisis, global banks drew on low US dollar funding rates and easy leveraging to extend dollar credit to non-US borrowers. After the Federal Reserve announced its large-scale bond purchases in 2008, however, investors responded to compressed long-term US Treasury rates by buying higher yielding dollar bonds from non-US issuers. Thus, US unconventional monetary policy contributed to shifting the balance of dollar credit transmission from global banks to global bond investors.
Since the late 1950s, the rest of the world has come to use the dollar to an extent that justifies speaking of the dollar’s global domain. The rest of the world denominates much debt in U.S. dollars, ...extending U.S. monetary policy’s sway. In addition, in outstanding foreign exchange deals, the rest of the world has undertaken to pay still more in U.S. dollars: off-balance-sheet dollar debts buried in footnotes. Consistent with the scale of dollar debt, most of the world economic activity takes place in countries with currencies tied to or relatively stable against the dollar, forming a dollar zone much larger than the euro zone. Even though the dollar assets of the world (minus the United States) exceed dollar liabilities, corporate sector dollar debts seem to make dollar appreciation akin to a global tightening of credit. Since the 1960s, claims that the dollar’s global role suffers from instability and confers great benefits on the U.S. economy have attracted much support. However, evidence that demand for dollars from official reserve managers forces unsustainable U.S. current account or fiscal deficits is not strong. The so-called exorbitant privilege is small or shared. In 2008 and again in 2020, the Federal Reserve demonstrated a willingness and capacity to backstop the global domain of the dollar. Politics could constrain the Fed’s ability to backstop the growing share of the domain of the dollar accounted for by countries that are not on such friendly terms with the U.S.
. The paper argues that China's capital controls remain substantially binding. This has allowed the Chinese authorities to retain some degree of short‐term monetary autonomy, despite the fixed ...exchange rate to July 2005. Although the Chinese capital controls have not been watertight, we find sustained and significant gaps between onshore and offshore renminbi interest rates and persistent dollar/renminbi interest rate differentials during the period of a de facto dollar peg. While some cross‐border flows do respond to market expectations and relative yields, they have not been large enough to equalise onshore and offshore renminbi yields.
Abstract
Cognitive science of religion (CSR) has increased influence in religious studies, the resistance of religious protectionists notwithstanding. CSR's most provocative work stresses the role of ...implicit cognition in explaining religious thought and conduct. Exhibiting explanatory pluralism, CSR seeks integrative accounts across the social, psychological, and brain sciences. CSR reflects prominent trends in the cognitive sciences generally. First, CSR is giving greater attention to the new tools and findings of cognitive neuroscience. Second, CSR researchers have done carefully designed, nonlaboratory studies of experience, incorporating precise physiological measures, obtaining astonishing findings about the experiences of ritual participants and observers. Third, CSR theorists have advanced evolutionary hypotheses about religions from eight perspectives (cross‐indexing three levels of selection with three mechanisms of selection). Cultural group selectionists headline credibility enhancing displays and Big Gods in the religious consolidation of large‐scale societies. Other CSR researchers marshal counterevidence and advance alternative hypotheses. CSR findings are incompatible with the New Atheists’ projects on two fronts.
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