Citation

Discussion Paper Details

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Title: China vs. U.S.: IMS Meets IPS

Author(s): Emmanuel Farhi and Matteo Maggiori

Publication Date: January 2019

Keyword(s): Confidence Crises, Dollar, Exorbitant Privilege, Nurkse Instability, reserve currencies, RMB, safe assets and Triffin dilemma

Programme Area(s): Financial Economics, International Macroeconomics and Finance, International Trade and Regional Economics and Monetary Economics and Fluctuations

Abstract: Currently both the International Monetary System (IMS) and the International Price Systems (IPS) are dominated by the U.S. The emergence of China, both as reserve currency and as a currency of invoicing, is likely to disrupt this status quo. We provide a framework to understand the forces that will shape this transition and identify sources of instability. We highlight the risk of an abrupt shift triggered by a run on the dollar.

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Bibliographic Reference

Farhi, E and Maggiori, M. 2019. 'China vs. U.S.: IMS Meets IPS'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13453