Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212830 
Year of Publication: 
2015
Series/Report no.: 
BOFIT Discussion Papers No. 20/2015
Publisher: 
Bank of Finland, Institute for Economies in Transition (BOFIT), Helsinki
Abstract: 
The paper investigates the determinants of geographical distribution of international currencies in global financial market transactions. We implement a gravity model, in which international currency distribution depends on the characteristics of the source and destination countries. We find that the source country's currency is more likely to be used in the financial market transactions of the destination country if the bilateral trade and capital flows are large or the destination country's economy is the larger of the two. We also find that the level of development of the destination country's financial market and whether the two countries use a common language are important determinants of the currency distribution. In addition, our model suggests that, to be a true international currency, the renminbi should be used more extensively in the financial markets of the US and UK.
JEL: 
F33
F36
G15
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-050-7
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.