The Rise of the Dollar and Fall of the Euro as International Currencies

NBER Working Paper No. 25410

Issued in December 2018

NBER Program(s):Asset Pricing, Corporate Finance, Economic Fluctuations and Growth, International Finance and Macroeconomics, International Trade and Investment, Monetary Economics



The modern notion of an international currency involves use in areas of international finance and trade that extend well beyond central banks' coffers. In addition to their important roles as foreign exchange reserves, international currencies are most frequently used to denominate corporate and government bonds, bank loans, and import and export invoices. These currencies offer unrivaled liquidity, constituting large shares of the volume on global foreign exchange markets, and are commonly chosen as the anchors targeted by countries with pegged or managed exchange rate regimes. In this short article, we provide evidence suggesting a recent rise in the use of the dollar, and fall of the use in the euro, with similar patterns manifesting across all these aspects of international currency use.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25410

Published: Matteo Maggiori & Brent Neiman & Jesse Schreger, 2019. "The Rise of the Dollar and Fall of the Euro as International Currencies," AEA Papers and Proceedings, vol 109, pages 521-526. citation courtesy of