Patterns in Invoicing Currency in Global Trade

39 Pages Posted: 18 Aug 2020

See all articles by Georgios Georgiadis

Georgios Georgiadis

European Central Bank (ECB)

Helena Le Mezo

European Central Bank (ECB)

Arnaud Mehl

European Central Bank (ECB)

Camila Casas

Central Bank of Colombia

Emine Boz

International Monetary Fund

Gita Gopinath

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Tra Nguyen

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: August, 2020

Abstract

This paper presents the most comprehensive and up-to-date panel data set of invoicing currencies in global trade. It provides data on the shares of exports and imports invoiced in US dollars, euros, and other currencies for more than 100 countries since 1990. The evidence from these data confirms findings from earlier research regarding the globally dominant role of the US dollar in invoicing – despite the comparatively smaller role of the US in global trade – and the overall stability of invoicing currency patterns. But the evidence also points to several novel stylised facts. First, both the US dollar and the euro have been increasingly used for invoicing even as the share of global trade accounted for by the US and the euro area has declined. Second, the euro is used as a vehicle currency in parts of Africa, and some European countries have seen significant shifts toward euro invoicing. And third, as suggested by the dominant currency paradigm, countries invoicing more in US dollars (euros) tend to experience greater US dollar (euro) exchange rate pass-through to their import prices; also, their trade volumes are more sensitive to fluctuations in these exchange rates.

Keywords: dominant currency paradigm, exchange rate pass-through, invoicing currency of trade

JEL Classification: F14, F31, F44

Suggested Citation

Georgiadis, Georgios and Mezo, Helena Le and Mehl, Arnaud and Casas, Camila and Boz, Emine and Gopinath, Gita and Nguyen, Tra, Patterns in Invoicing Currency in Global Trade (August, 2020). ECB Working Paper No. 20202456, Available at SSRN: https://ssrn.com/abstract=3673878

Georgios Georgiadis (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Helena Le Mezo

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Arnaud Mehl

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Camila Casas

Central Bank of Colombia ( email )

Cra. 4 # 7 - 14
Cali
Colombia

Emine Boz

International Monetary Fund

Gita Gopinath

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tra Nguyen

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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