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Eurodollar banking and currency internationalisation

Author

Listed:
  • Dong He
  • Robert N McCauley

Abstract

It is widely held that currencies of surplus countries, such as China, cannot enjoy wide international use. We argue that the eurodollar market has had little to do with the direction of net capital flows or the US current account balance. It has played different roles over the past 38 years, most of all intermediation among non-US residents. Looking at the eurodollar market could help predict the evolution of the offshore renminbi market. Even if it now mainly serves as a conduit of funds to mainland China from abroad, in the future this market, too, could mainly intermediate between non-Chinese residents.

Suggested Citation

  • Dong He & Robert N McCauley, 2012. "Eurodollar banking and currency internationalisation," BIS Quarterly Review, Bank for International Settlements, June.
  • Handle: RePEc:bis:bisqtr:1206f
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    References listed on IDEAS

    as
    1. Dong He & Robert N. McCauley, 2010. "Offshore Markets for the Domestic Currency: Monetary and Financial Stability Issues," Working Papers 1002, Hong Kong Monetary Authority.
    2. Faisal Ahmed & Shengzu Wang & Isabelle Mateos y Lago & Samar Maziad & Stephanie Segal & Pascal Farahmand & Udaibir S Das, 2011. "Internationalization of Emerging Market Currencies; A Balance Between Risks and Rewards," IMF Staff Discussion Notes 11/17, International Monetary Fund.
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    Citations

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    Cited by:

    1. International Monetary Fund, 2014. "United Kingdom; Selected Issues," IMF Staff Country Reports 14/234, International Monetary Fund.
    2. David Leung & John Fu, 2014. "Interactions between CNY and CNH Money and Forward Exchange Markets," Working Papers 132014, Hong Kong Institute for Monetary Research.
    3. Haque, Faizul & Brown, Kym, 2017. "Bank ownership, regulation and efficiency: Perspectives from the Middle East and North Africa (MENA) Region," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 273-293.
    4. Robert N. McCauley & Patrick McGuire & Vladyslav Sushko, 2015. "Global dollar credit: links to US monetary policy and leverage," Economic Policy, CEPR;CES;MSH, vol. 30(82), pages 187-229.
    5. Dong He & Robert N McCauley, 2013. "Transmitting Global Liquidity to East Asia: Policy Rates, Bond Yields, Currencies and Dollar Credit," Working Papers 152013, Hong Kong Institute for Monetary Research.
    6. Dong He & Paul Luk & Wenlang Zhang, 2016. "Internationalisation of the Renminbi as an Investing and a Funding Currency: Analytics and Prospects," Pacific Economic Review, Wiley Blackwell, vol. 21(3), pages 295-323, August.
    7. Hyun Song Shin, 2017. "Breaking free of the triple coincidence in international finance," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Statistical implications of the new financial landscape, volume 43 Bank for International Settlements.
    8. Robert N. McCauley, 2013. "Renminbi internationalisation and China’s financial development," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(2), pages 101-115, May.
    9. He, Dong, 2012. "Renminbi Internationalisation: A Primer," MPRA Paper 40672, University Library of Munich, Germany.
    10. Paulus, Dominique & Van den Heede, Koen & Gerkens, Sophie & Desomer, Anja & Mertens, Raf, 2013. "Development of a national position paper for chronic care: Example of Belgium," Health Policy, Elsevier, vol. 111(2), pages 105-109.
    11. Borio, Claudio, 2014. "The financial cycle and macroeconomics: What have we learnt?," Journal of Banking & Finance, Elsevier, vol. 45(C), pages 182-198.
    12. Batten, Jonathan A. & Szilagyi, Peter G., 2016. "The internationalisation of the RMB: New starts, jumps and tipping points," Emerging Markets Review, Elsevier, vol. 28(C), pages 221-238.

    More about this item

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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