On the Welfare Benefits of an International Currency

39 Pages Posted: 13 Mar 2007

See all articles by Prakash Kannan

Prakash Kannan

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2007


Is it beneficial for a country's currency to be used internationally? And, if so, can we quantify the benefit? Since the emergence of the euro, there has been great interest in the consequences of a transfer of the US dollar's premier international role to the euro. Building on recent advancements in the literature on search models of money, this paper presents a novel model-based approach towards assessing the welfare benefits associated with the international use of a country's currency. The welfare gain for the Euro area in having the euro internationally used ranges from 1.7% to 2.1% of consumption.

Keywords: Currencies, Money, Economic models

JEL Classification: E40, F33

Suggested Citation

Kannan, Prakash, On the Welfare Benefits of an International Currency (March 2007). IMF Working Papers, Vol. , pp. 1-37, 2007. Available at SSRN: https://ssrn.com/abstract=969863

Prakash Kannan (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
(202)623-8806 (Phone)

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