China vs. U.S.: IMS Meets IPS

Matteo Maggiori and Emmanuel Farhi

No 13453, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Currently both the International Monetary System (IMS) and the International Price Systems (IPS) are dominated by the U.S. The emergence of China, both as reserve currency and as a currency of invoicing, is likely to disrupt this status quo. We provide a framework to understand the forces that will shape this transition and identify sources of instability. We highlight the risk of an abrupt shift triggered by a run on the dollar.

Keywords: Reserve currencies; Triffin dilemma; Nurkse instability; Confidence crises; Safe assets; Exorbitant privilege; Dollar; Rmb (search for similar items in EconPapers)
JEL-codes: D42 E12 E42 E44 F3 F55 G15 G28 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-mac and nep-mon
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