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Safe asset scarcity and multipolar international currency

Author

Listed:
  • Wang, Chenxi
  • Lu, Dong
  • E., Meihe
  • Mu, Yuhao
  • Peng, Yueqian

Abstract

We extend the model of Chahrour and Valchev (2022) to study how safe asset scarcity affects the multipolar international currency equilibrium. We also examine the impact of US financial sanctions and USD stablecoins on the multipolar international currency equilibrium.

Suggested Citation

  • Wang, Chenxi & Lu, Dong & E., Meihe & Mu, Yuhao & Peng, Yueqian, 2025. "Safe asset scarcity and multipolar international currency," Economics Letters, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004586
    DOI: 10.1016/j.econlet.2025.112621
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    References listed on IDEAS

    as
    1. Liu, Tao & Lu, Dong & Woo, Wing Thye, 2019. "Trade, finance and international currency," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 374-413.
    2. Marc Flandreau, 1996. "Blocs, Zones and Bands: International Monetary History in the Light of Recent Theoretical Developments," Sciences Po Economics Publications (main) hal-03416299, HAL.
    3. Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2017. "The Safe Assets Shortage Conundrum," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 29-46, Summer.
    4. Pierre-Olivier Gourinchas & Hélène Rey & Maxime Sauzet, 2019. "The International Monetary and Financial System," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 859-893, August.
    5. Ryan Chahrour & Rosen Valchev, 2022. "Trade Finance and the Durability of the Dollar," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(4), pages 1873-1910.
    6. Eichengreen, Barry & Flandreau, Marc, 1996. "Blocs, Zones and Bands: International Monetary History in Light of Recent Theoretical Developments," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(4), pages 398-418, September.
    7. Gita Gopinath & Jeremy C Stein, 2021. "Banking, Trade, and the Making of a Dominant Currency," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(2), pages 783-830.
    8. Marco Cipriani & Linda S. Goldberg & Gabriele La Spada, 2023. "Financial Sanctions, SWIFT, and the Architecture of the International Payment System," Journal of Economic Perspectives, American Economic Association, vol. 37(1), pages 31-52, Winter.
    9. Ryan Chahrour & Rosen Valchev, 2024. "The Dollar in an Era of International Retrenchment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(3), pages 1042-1080, September.
    10. Barry Eichengreen, 2019. "Two Views of the International Monetary System," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 54(4), pages 233-236, July.
    11. Marc Flandreau, 1996. "Blocs, Zones and Bands: International Monetary History in the Light of Recent Theoretical Developments," Post-Print hal-03416299, HAL.
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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F01 - International Economics - - General - - - Global Outlook
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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