Theories of International Currencies and the Future of the World Monetary Order
International Studies Review, Vol. 14, No. 1, pp. 51-77
Posted: 21 Mar 2012 Last revised: 2 Apr 2014
Date Written: March 21, 2012
The international standings of currencies form a principal characteristic of the international monetary order, shaping the world economic and political system by influencing the economic and political relationships among countries. This paper provides a systematic review of the literature on international currencies, encompassing both economics and political science, with the aim of providing useful groundwork to help develop a better analytical framework for the study of international currency standing. In particular, this paper discusses the international currency concept, the benefits and costs of issuing an international currency, and the determinants of international currency standing. It also assesses conflicting prospects for the future of the US dollar as the world’s key currency, addressing the likelihoods of further internationalization of the euro and the renminbi, the dollar’s main potential rivals. It in addition calls attention to certain political economy factors as salient issues for the future study of international currency standing.
Keywords: dollar, euro, international currency, international monetary system, renminbi, reserve currency, yuan
JEL Classification: F33
Suggested Citation: Suggested Citation