Exchange Arrangements Entering the 21st Century: Which Anchor Will Hold?
By Ethan Ilzetzki, Carmen M. Reinhart, Kenneth S. Rogoff. 2017
467 citations recorded by the source corpus.
This paper provides a comprehensive history of anchor or reference currencies, exchange rate arrangements, and a new measure of foreign exchange restrictions for 194 countries and territories over 1946-2016. We find that the often-cited post-Bretton Woods transition from fixed to flexible arrangements is overstated; regimes with limited flexibility remain in the majority. Our central finding is that the US dollar scores (by a wide margin) as the world’s dominant anchor currency and, by some metrics, its use is far wider today than 70 years ago. In contrast, the global role of the euro appears to have stalled in recent years. While the incidence of capital account restrictions has been trending lower for decades, an important wave toward capital market integration dates as recently as the mid-1990s. We suggest that record accumulation of reserves post 2002 has much to do with many countries’ desire to stabilize exchange rates in an environment of markedly greater capital mobility. Indeed, the continuing desire to manage exchange rates despite increased capital mobility post-2003 may be a key factor underpinning the modern-day Triffin dilemma that some have recently pointed to.
Subfields: Finance, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/d8ae37b49a88fff3f57ac8844254a2a15478ae07
Citations in the corpus
- Financial Flows and the International Monetary System (2015, unknown): “The exchange rate regime data are taken from the update of the monthly de facto exchange rate regime classification of Reinhart and Rogoff (2004) by Ilzetzki and Reinhart (2009). The exchange rate regime is multilateral; we do not consider bilateral regimes vis-" a-vis the US dollar (though that wou”
- Foreign effects of higher U.S. interest rates (2019, unknown): “See Section 6.”
- International Credit Supply Shocks (2017, unknown): “For instance, Table 3 reports the correlation between the cross-country peak responses of consumption, house prices, and the real exchange rate and a small set of additional country characteristics, including a measure of exchange rate flexibility (from the annual fine classification of Ilzetzki et ”