A balance sheet approach to international trade and capital flows

Sylvio Antonio Kappes

Chapter 4 in Central Banking, Monetary Policy, and Exchange Rates, 2026, pp 65-79 from Edward Elgar Publishing

Abstract: The dollar is the world's leading currency: a considerable part of global trade is invoiced in dollars, and around 90% of transactions in the global foreign exchange market have the dollar at one end. A considerable part of the dollars that move international trade and circulate in the foreign exchange market are offshore dollars. The aim of this chapter is to explain the basic principles of how this offshore market works and its links with international trade and capital flows at a global level. In addition, we discuss the importance of dealers in the global foreign exchange market. To do this, we use accounting balance sheets.

Keywords: Central Banking; Monetary Policy; Exchange Rates; Capital Flows; Endogenous Money; Open Economies (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035330041
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