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The Use of the Yen as a Reserve Currency

Author

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  • Peter M. Garber

    (Department of Economics, Brown University)

Abstract

The depreciation of the U.S. dollar in 1995 rekindled discussion about the organization of the international monetary system, including calls to expand the roles of the yen and the deutsche mark as reserve currencies. The yen has not assumed a greater role because sufficient yen instruments are unavailable. The measures that make the yen relatively illiquid result partly from public debt management policy and control over the competitive advantage of the government in securities issuance. From a narrow perspective, it is quite easy to expand the role of the yen as a reserve currency: raise the supply of Treasury bills to approximately \60 trillion, eliminate the transaction tax on government securities, and let the Bank of Japan be a banker for foreign central banks. Such changes, however, imply a loss of control over the holders of the most liquid instruments in the Japanese money market.

Suggested Citation

  • Peter M. Garber, 1996. "The Use of the Yen as a Reserve Currency," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 14(2), pages 1-21, December.
    • Handle: RePEc:ime:imemes:v:14:y:1996:i:2:p:1-21
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    File URL: http://www.imes.boj.or.jp/research/papers/english/me14-2-1.pdf
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    Citations

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    Cited by:

    1. Kawai, Masahiro & Akiyama, Shigeru, 2000. "Implications of the currency crisis for exchange rate arrangements in emerging East Asia," Policy Research Working Paper Series 2502, The World Bank.
    2. Robert McCauley, 1999. "The Euro and the Dollar, 1998," Open Economies Review, Springer, vol. 10(1), pages 91-133, February.
    3. McCauley, R.N., 1997. "The Euro and the Dollar," Princeton Essays in International Economics 205, International Economics Section, Departement of Economics Princeton University,.
    4. Kawai, Masahiro & Akiyama, Shigeru, 1998. "The Role of Nominal Anchor Currencies in Exchange Rate Arrangements," Journal of the Japanese and International Economies, Elsevier, vol. 12(4), pages 334-387, December.
    5. Cohen, Benjamin J., 2014. "Will History Repeat Itself? Lessons for the Yuan," ADBI Working Papers 453, Asian Development Bank Institute.
    6. Hartmann, Philipp, 1998. "The Currency Denomination of World Trade after European Monetary Union," Journal of the Japanese and International Economies, Elsevier, vol. 12(4), pages 424-454, December.

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