The U.S. Dollar's Facilitating Role as International Money Today

Ronald I. McKinnon

in The Unloved Dollar Standard

Published in print December 2012 | ISBN: 9780199937004
Published online January 2013 | e-ISBN: 9780199980703 | DOI:
The U.S. Dollar's Facilitating Role as International Money Today

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Banks find a great economy of markets if just one currency, the Nth, intermediates virtually all foreign exchange transacting. Data from the Bank for International Settlements shows that the dollar is now the world's means of payment, store of value, and unit of account despite great financial traumas emanating from the United States and the decline in the euro. Emerging markets with saving (trade) surpluses are more or less confined to lending in dollars; and, outside of Europe, developing countries with trade deficits usually cover them by borrowing in dollars. Interest rates on U.S. Treasuries are considered the “risk free” benchmark in international bond markets.

Keywords: vehicle currency; invoice currency; standard of deferred payment; Nth currency; official reserves

Chapter.  3765 words. 

Subjects: Financial Markets

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