Yen internationalization and Japan's international reserves

Zhiwen Zhang, Anthony Makin and Qinxian Bai

Economic Modelling, 2016, vol. 52, issue PB, 452-466

Abstract: The relationship between major East Asian economies' international reserves and internationalization of their currencies presents a seeming paradox in international finance. While large international reserves may be expected to foster more widespread global use of a currency, strong growth of international reserves has been associated with very low Asian currency internationalization. Using the generalized method of moments (GMM) estimator we show the overall size of the Bank of Japan's international reserves, as well as the ratio of its foreign exchange reserves to international reserves, are negatively related to yen internationalization, while gold reserves and special drawing rights are positively related.

Keywords: International reserves; Yen internationalization; Foreign exchange; Gold; SDR (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:52:y:2016:i:pb:p:452-466

DOI: 10.1016/j.econmod.2015.09.026

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