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Hegemonic Currencies during the Crisis: The Dollar versus the Euro in a Cartalist Perspective

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  • David Fields
  • Matías Vernengo

Abstract

This paper suggests that the dollar is not threatened as the hegemonic international currency, and that most analysts are incapable of understanding the resilience of the dollar, not only because they ignore the theories of monetary hegemonic stability or what, more recently, has been termed the geography of money; but also as a result of an incomplete understanding of what a monetary hegemon does. The hegemon is not required to maintain credible macroeconomic policies (i.e., fiscally contractionary policies to maintain the value of the currency), but rather to provide an asset free of the risk of default. It is argued that the current crisis in Europe illustrates why the euro is not a real contender for hegemony in the near future.

Suggested Citation

  • David Fields & Matías Vernengo, 2011. "Hegemonic Currencies during the Crisis: The Dollar versus the Euro in a Cartalist Perspective," Economics Working Paper Archive wp_666, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_666
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    References listed on IDEAS

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    1. James Crotty, 2011. "The Great Austerity War: What Caused the Deficit Crisis and Who Should Pay to Fix It?," UMASS Amherst Economics Working Papers 2011-17, University of Massachusetts Amherst, Department of Economics.
    2. Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133.
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    Cited by:

    1. Eun, Cheol S. & Kim, Soo-Hyun & Lee, Kyuseok, 2015. "Currency competition between the dollar and euro: Evidence from exchange rate behaviors," Finance Research Letters, Elsevier, vol. 12(C), pages 100-108.
    2. repec:eee:jpolmo:v:40:y:2018:i:1:p:16-36 is not listed on IDEAS
    3. Naphon Phumma, 2014. "Neoliberalism and the global imbalances: the neo-Gramscian approach," Working Paper Series, Department of Economics, University of Utah 2014_04, University of Utah, Department of Economics.
    4. Dodig, Nina & Herr, Hansjörg, 2015. "Theories of finance and financial crisis: Lessons for the Great Recession," IPE Working Papers 48/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    5. Cohen, Benjamin J., 2015. "The Demise of the Dollar?," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 18.
    6. Ponsot, Jean-François, 2016. "The “four I's” of the international monetary system and the international role of the euro," Research in International Business and Finance, Elsevier, vol. 37(C), pages 299-308.
    7. Labrinidis, George, 2014. "The forms of world money," MPRA Paper 59962, University Library of Munich, Germany.
    8. Soo-Hyun Kim & Kyuseok Lee, 2016. "The Influences of Major Currencies in Foreign Exchange Markets: A Regression-Based Measure and Its Application," International Review of Finance, International Review of Finance Ltd., vol. 16(2), pages 277-289, June.
    9. Labrinidis, George, 2014. "International reserves in the era of quasi-world money," MPRA Paper 59963, University Library of Munich, Germany.

    More about this item

    Keywords

    Dollar; Euro; International Currency;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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