Eurodollar Banking and Currency Internationalisation

14 Pages Posted: 14 Sep 2012

See all articles by Dong He

Dong He

Hong Kong Monetary Authority; Hong Kong Institute for Monetary Research (HKIMR)

Robert N. McCauley

Bank for International Settlements (BIS)

Date Written: June 4, 2012

Abstract

It is widely held that currencies of surplus countries, such as China, cannot enjoy wide international use. We argue that the eurodollar market has had little to do with the direction of net capital flows or the US current account balance. It has played different roles over the past 38 years, most of all intermediation among non-US residents. Looking at the eurodollar market could help predict the evolution of the offshore renminbi market. Even if it now mainly serves as a conduit of funds to mainland China from abroad, in the future this market, too, could mainly intermediate between non-Chinese residents.

JEL Classification: E4, E5, F3, F4, G15

Suggested Citation

He, Dong and McCauley, Robert N., Eurodollar Banking and Currency Internationalisation (June 4, 2012). BIS Quarterly Review, June 2012. Available at SSRN: https://ssrn.com/abstract=2128556

Dong He

Hong Kong Monetary Authority

3 Garden Road, 30th Floor
Hong Kong
Hong Kong

Hong Kong Institute for Monetary Research (HKIMR)

3 Garden Road, 8th Floor
Hong Kong
China

Robert N. McCauley (Contact Author)

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

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