Bringing the Central Bank into the Study of Currency Internationalization: Monetary Policy, Independence, and Internationalization
Hyoung-kyu Chey and
Yu Wai Vic Li
Additional contact information
Yu Wai Vic Li: Hong Kong Institute of Education
No 15-23, GRIPS Discussion Papers from National Graduate Institute for Policy Studies
Abstract:
Despite the central bank's crucial position in the economy, as the issuer of the currency and the body responsible for monetary policy, its preferences regarding currency internationalization and its roles in that process have rarely been analyzed in the literature. This study attempts to fill this critical gap by bringing the central bank into the study of currency internationalization. A conventional understanding of currency internationalization is that it tends to reduce monetary policy autonomy, which implies a natural tendency of the central bank to oppose it. This study shows, however, that currency internationalization does not necessarily reduce the central bank's monetary policy autonomy, and may in fact even strengthen it. It shows that currency internationalization is likely to strengthen the central bank's independence as well. Based on these findings, this study argues that a central bank with weak monetary policy autonomy and low independence is more likely to support the internationalization of its country's currency. These arguments are empirically verified, mainly by in-depth analysis of the case of the People's Bank of China and the renminbi.
Pages: 26 pages
Date: 2016-02
New Economics Papers: this item is included in nep-cba, nep-mon and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
https://grips.repo.nii.ac.jp/?action=repository_ac ... bute_id=20&file_no=1 (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:ngi:dpaper:15-23
Access Statistics for this paper
More papers in GRIPS Discussion Papers from National Graduate Institute for Policy Studies Contact information at EDIRC.
Bibliographic data for series maintained by (dp@r-center.grips.ac.jp this e-mail address is bad, please contact repec@repec.org).