Currency Usage for Cross Border Payments

Hector Perez-Saiz, Longmei Zhang and Roshan Iyer

No 2023/072, IMF Working Papers from International Monetary Fund

Abstract: While the global usage of currencies other than the U.S. dollar and the euro for cross-border payments remains limited, rapid technological (e.g. digital money) or geopolitical changes could accelerate a regime shift into a multipolar or more fragmented international monetary system. Using the rich Swift database of cross-border payments, we empirically estimate the importance of legal tender status, geopolitical distance, and other variables vis-à-vis the large inertia effects for currency usage, and perform several forecasting simulations to better understand the role of these variables in shaping the future payments landscape. While our results suggest a substantially more fragmented international monetary system would be unlikely in the short and medium term, the impact of new technologies remains highly uncertain, and much more rapid geopolitical developments than expected could accelerate the transformation of the international monetary system towards multipolarity.

Keywords: Cross border payments; Swift; currency dominance; legal tender; international monetary system (IMS); currency usage; legal tender status; panel of currency; Cross border; data base; Currencies; International monetary system; Financial sector development; Digital currencies; Portfolio investment; Global; Africa; Asia and Pacific (search for similar items in EconPapers)
Pages: 28
Date: 2023-03-24
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fdg, nep-mon, nep-opm and nep-pay
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=531324 (application/pdf)

Related works:
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:imf:imfwpa:2023/072

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().