Offshore Markets for the Domestic Currency: Monetary and Financial Stability Issues
AbstractWe show in this paper that offshore markets intermediate a large chunk of financial transactions in major reserve currencies such as the US dollar. We argue that, for emerging market economies that are interested to see some international use of their currencies, offshore markets can help to increase the recognition and acceptance of the currency, while still allowing the authorities to retain a measure of control on the pace of capital account liberalisation. The development of offshore markets could pose risks to monetary and financial stability in the home economy, which need to be prudently managed. Experience in dealing with the Euromarkets by the Federal Reserve and other authorities of the major reserve currency economies show that policy options are available for managing such risks.
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Bibliographic InfoPaper provided by Hong Kong Monetary Authority in its series Working Papers with number 1002.
Length: 39 pages
Date of creation: Mar 2010
Date of revision:
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More information through EDIRC
offshore markets; currency internationalisation; monetary stability; financial stability;
Other versions of this item:
- Dong He & Robert McCauley, 2010. "Offshore markets for the domestic currency: monetary and financial stability issues," BIS Working Papers 320, Bank for International Settlements.
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-15 (All new papers)
- NEP-CBA-2010-05-15 (Central Banking)
- NEP-IFN-2010-05-15 (International Finance)
- NEP-MAC-2010-05-15 (Macroeconomics)
- NEP-MON-2010-05-15 (Monetary Economics)
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