DP13453 China vs. U.S.: IMS Meets IPS
Author(s): | Emmanuel Farhi, Matteo Maggiori |
Publication Date: | January 2019 |
Date Revised: | January 2019 |
Keyword(s): | Confidence Crises, Dollar, Exorbitant Privilege, Nurkse Instability, reserve currencies, RMB, safe assets, Triffin dilemma |
JEL(s): | D42, E12, E42, E44, F3, F55, G15, G28 |
Programme Areas: | Financial Economics, International Trade and Regional Economics, International Macroeconomics and Finance, Monetary Economics and Fluctuations |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=13453 |
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.