Dominant Currencies and External Adjustment

Author/Editor:

Gustavo Adler ; Camila Casas ; Luis M. Cubeddu ; Gita Gopinath ; Nan Li ; Sergii Meleshchuk ; Carolina Osorio Buitron ; Damien Puy ; Yannick Timmer

Publication Date:

July 20, 2020

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary:

The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks.

Series:

Staff Discussion Note No. 20/05

Subject:

English

Publication Date:

July 20, 2020

ISBN/ISSN:

9781513512150/2617-6750

Stock No:

SDNEA2020005

Format:

Paper

Pages:

46

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