Currency internationalization is the process of currency going beyond national borders by assuming monetary functions (means of payment, accumulation and universal measure of value ) in international economic relations [1] . The national currency begins to be used not only for international payments (means of payment), but contracts and tariffs begin to be nominated in it (it acts as a measure of value). At the same time, monetary functions within the country are fully preserved.
Content
Stages of the internationalization of currency
Three stages of currency internationalization are distinguished:
- Regional currency - a national currency that performs certain functions of money within a region or region, recognized in this role by the public and private sectors. The regional currency within the region performs all functions except the universal measure of value, due to the fact that for market participants, according to the traditions of business turnover, the currency of third countries may remain the most convenient. Examples of regional currencies are the Russian ruble in the CIS, the African financial community franc in the West African economic monetary union, and others.
- International currency is a national currency that performs all the functions of money outside the issuing state, except for a universal measure of value. At the same time, within a region, an international currency can be a universal measure of value. Examples of international currencies are the pound sterling , the Japanese yen , to a lesser extent - the Canadian dollar , Singapore dollar , Swedish krona , Swiss franc .
- Global (world) currency - a national currency that acts as a measure of value, calculation and circulation and a means of savings throughout the world. The unconditional global currency is the US dollar , to a lesser extent - the euro .
Currency Internationalization Factors
For a currency to go beyond national borders, it must meet a number of objective requirements . The basic ones are the free movement of international capital and the absence of currency restrictions. Among economic factors, the key is the size of the national economy and the stability of the national currency (both its purchasing power and the exchange rate ), which determines the confidence in it on the part of market participants. To raise the status of the currency, the authorities need to develop a capital market and a money market, where non-residents can place their savings and reserves [2] . Local financial markets must be open and liberal [3] . Network effects are important - currencies gain additional value due to the fact that they are used by other market participants [4] .
Notes
- ↑ Internationalization of the ruble: prospects and risks. Bank of Russia Report. St. Petersburg: International Financial Congress, 2017.
- ↑ Hiroyuki Ito, Robert McCauley, Tracy Chan. Currency composition of reserves, trade invoicing and currency movements // Emerging Markets Review. - 2015 .-- T. 25 . - S. 16-29 .
- ↑ Livia Chiţu, Barry Eichengreen, Arnaud Mehl. When did the dollar overtake sterling as the leading international currency? Evidence from the bond markets // Journal of Development Economics. - 2014 .-- T. 111 . - S. 225-245 .
- ↑ Dong He, Xiangrong Yu. Network effects in currency internationalization: Insights from BIS triennial surveys and implications for the renminbi // Journal of International Money and Finance. - 2016 .-- T. 68 . - S. 203-229 .
Literature
- Borisov S. The use of the ruble in international payments and reserves (quantitative aspect). - M .: IMEMO RAS, 2011.
- The internationalization of the ruble: prospects and risks. Bank of Russia Report. St. Petersburg: International Financial Congress, 2017.
- Mikheeva E. Z. The state and prospects of the internationalization of the ruble in a globalized economy // Digest Finance, 2012. - No. 9. - P.46-55.
- Moiseev S. The ruble as a reserve currency // Issues of Economics, 2008.— No. 9.— S.4-21.
- Kondratov D. I. The Formation of the Russian Ruble as an International Currency // HSE Economic Journal, 2012. - No. 3. - P.367-403.