American Economic Review: Vol. 102 No. 3 (May 2012)


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International Liquidity in a Multipolar World

Article Citation

Eichengreen, Barry. 2012. "International Liquidity in a Multipolar World." American Economic Review, 102(3): 207-12.

DOI: 10.1257/aer.102.3.207


Today's global monetary and financial system, to a remarkable extent, continues to rely on the U.S. dollar for international liquidity. This reflects the currency's historic role, the liquidity of American financial markets, and the absence of alternatives. But with the emergence of emerging markets, the capacity of the United States to provide safe assets will be outstripped by the growth of international transactions. It is thus likely that other large economies, presumably Europe and China, will eventually join the United States as sources of international liquidity and that other currencies will come to share the dollar's reserve-currency status.

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Eichengreen, Barry (U CA, Berkeley)

JEL Classifications

E42: Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
F32: Current Account Adjustment; Short-term Capital Movements
F33: International Monetary Arrangements and Institutions

American Economic Review

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