Yen Internationalization and Japan's International Reserves

15 Pages Posted: 16 Dec 2015

See all articles by Zhiwen Zhang

Zhiwen Zhang

Sun Yat-sen University-School of International Relations

Anthony J. Makin

Griffith University - Griffith Business School

Qinxian Bai

Liaoning University

Date Written: April 28, 2015

Abstract

The relationship between major East Asian economies' international reserves and internationalization of their currencies presents a seeming paradox in international finance. While large international reserves may be expected to foster more widespread global use of a currency, strong growth of international reserves has been associated with very low Asian currency internationalization. Using the generalized method of moments (GMM) estimator we show the overall size of the Bank of Japan's international reserves, as well as the ratio of its foreign exchange reserves to international reserves, are negatively related to yen internationalization, while gold reserves and special drawing rights are positively related.

Suggested Citation

Zhang, Zhiwen and Makin, Anthony J. and Bai, Qinxian, Yen Internationalization and Japan's International Reserves (April 28, 2015). Economic Modelling, Vol. 52, Part B, January 2016, pp.452-466. Available at SSRN: https://ssrn.com/abstract=2703358

Zhiwen Zhang (Contact Author)

Sun Yat-sen University-School of International Relations ( email )

Guangzhou, Guangdong
China

Anthony J. Makin

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

Qinxian Bai

Liaoning University ( email )

66 Chongshan Road Middle, Huanggu District
Shenyang, Liaoning 110036
China

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