Offshore markets for the domestic currency: monetary and financial stability issues

Dong He and Robert McCauley

No 320, BIS Working Papers from Bank for International Settlements

Abstract: We show in this paper that offshore markets intermediate a large chunk of financial transactions in major reserve currencies such as the US dollar. We argue that, for emerging market economies that are interested in seeing some international use of their currencies, offshore markets can help to increase the recognition and acceptance of the currency while still allowing the authorities to retain a measure of control over the pace of capital account liberalisation. The development of offshore markets could pose risks to monetary and financial stability in the home economy which need to be prudently managed. The experience of the Federal Reserve and of the authorities of the other major reserve currency economies in dealing with the euromarkets shows that policy options are available for managing such risks.

Keywords: offshore markets; currency internationalisation; monetary stability; financial stability (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-09
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www.bis.org/publ/work320.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/work320.htm (text/html)

Related works:
Working Paper: Offshore Markets for the Domestic Currency: Monetary and Financial Stability Issues (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:320

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().