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Will History Repeat Itself? Lessons for the Yuan

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  • Cohen, Benjamin J.

    (Asian Development Bank Institute)

Abstract

For many observers, internationalization is the yuan’s manifest destiny and a by-product of the remarkable economic success of the People’s Republic of China (PRC). But is such confidence warranted? Recent history has seen the emergence of other currencies that were also expected, at least for a while, to attain wide, growing cross-border use. These included the deutsche mark (DM), the Japanese yen, and the euro (successor to the DM). Yet in the end, their internationalization reached an upper limit, short of expectations. Will history repeat itself? Or will the yuan prove exceptional, as the currency that finally managed to keep ascending where others faltered? The aim of this paper is to see what lessons may be drawn from these earlier experiences for the anticipated internationalization of the yuan.

Suggested Citation

  • Cohen, Benjamin J., 2014. "Will History Repeat Itself? Lessons for the Yuan," ADBI Working Papers 453, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0453
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    File URL: http://www.adbi.org/files/2014.01.17.wp453.will.history.repeat.itself.lessons.yuan.pdf
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    References listed on IDEAS

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    1. Maehara, Yasuhiro, 1993. "The internationalization of the Yen and its role as a key currency," Journal of Asian Economics, Elsevier, vol. 4(1), pages 153-170.
    2. C. Randall Henning, 1994. "Currencies and Politics in the United States, Germany, and Japan," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 15.
    3. Nikiforos Laopodis, 2001. "International Interest-Rate Transmission and the “German Dominance Hypothesis” Within EMS," Open Economies Review, Springer, vol. 12(4), pages 347-377, October.
    4. Adam S. Posen, 2008. "Why the Euro will Not Rival the Dollar," International Finance, Wiley Blackwell, vol. 11(1), pages 75-100, May.
    5. Koichi Hamada & Yasushi Okada, 2009. "Monetary and International Factors behind Japan's Lost Decade," NBER Chapters,in: Financial Globalization, 20th Anniversary Conference, NBER-TCER-CEPR National Bureau of Economic Research, Inc.
    6. Hagen, Jurgen von & Fratianni, Michele, 1990. "German dominance in the EMS: evidence from interest rates," Journal of International Money and Finance, Elsevier, vol. 9(4), pages 358-375, December.
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    Cited by:

    1. Bénassy-Quéré, Agnès & Forouheshfar, Yeganeh, 2015. "The impact of yuan internationalization on the stability of the international monetary system," Journal of International Money and Finance, Elsevier, vol. 57(C), pages 115-135.

    More about this item

    Keywords

    yuan; deutsche mark; japanese yen; euro; internationalization;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • 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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