The Internationalization of Yen and Key Currency Questions

Toru Iwami

No 1994/041, IMF Working Papers from International Monetary Fund

Abstract: The role of the yen in the International financial system is reconsidered from a comparative (historical) approach. Compared with the D-Mark in the postwar years, the limited use of the yen results not so much from regulations on capital movements as from the structure and behavior of Japanese economy. The history of the pound-sterling and the U.S. dollar reveals the fact that such factors as the network of foreign trade and economic size constitute the basis and “inertia” of a key-currency. Thus for a currency to rise to a key-position in global transactions, real factors are more decisive than financial market arrangement. Seen from the foreign economic relations, it is not possible for Japan to own a key-currency independent from the U.S. dollar.

Keywords: WP; yen; dollar; currency; market; Japan; market need; yen share; pound sterling; currency risk; transaction currency; euro-yen bond; economy of scale; foreign trade; euro-currency market; trade finance market; euro-yen business; market share; Currencies; International monetary system; Exports; Imports; Current account balance; North America; Europe; East Asia; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 96
Date: 1994-04-01
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Citations: View citations in EconPapers (5)

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