the case of renminbi internationalization

The scholarly debate on currency internationalization focuses on country characteristics and policies as the main determinants in currency competition. However, this literature has neglected the fact that, given the intertwined nature of the international monetary system, other countries’ actions and the functioning logic of international finance can also impact a currency's international status. This article shows that RMB usage has been boosted not only by Chinese statecraft but also by economic actors’ recent difficulties in using the dollar. The American financial sanctions against Chinese trade partners, the cyclical instability of international finance, as well as peripheral countries' low inflows of dollars have encouraged firms and banks to use the renminbi as an alternative to the dollar. In addition to contributing to a broader understanding of the drivers of currency internationalization, this article proposes a model that explains the mechanisms that push firms and banks away from the incumbent international currency. I posit that changes in domestic and international conditions influence currency transaction costs, thereby propelling economic actors to increase their use of currencies with relatively lower transaction costs. Interviews with Chinese senior officials from the PBOC and the Ministry of Commerce, manufacturing companies, and bank staff are the main primary sources for this article. I triangulate this information with news reports and speeches both in Chinese and English

an index for the quality of crisis finance

The Global Financial Safety Net (GFSN) – the institutions and arrangements that provide short-term crisis finance – has turned into a highly complex, uncoordinated system of global, multilateral, and bilateral instruments. The present paper elaborates on a composite index of the GFSN to analyse its preparedness for shielding countries from financial crises. This first-of-its-kind index comprises six components that measure the vulnerability and resilience of individual countries to financial crises derived from economic and political economy financial crisis literature. We apply this index to data from 192 UN member countries we collected in the GFSN tracker for the period of the COVID-19 pandemic in terms of their asses to and use of the GFSN. This index, and the use of novel forms of graphical displaying, allow us to identify a hierarchy in the access to short-term liquidity by the GFSN. At the bottom, we find low-income countries with sole access to IMF standard conditional crisis finance, while we find at the top countries with access to bilateral currency swaps, especially those provided by the US Federal Reserve. Our analysis also reveals that first, the temporary reformed unconditional access of IMF crisis finance during the pandemic has temporarily improved those countries’ position in the GFSN hierarchy; second, bilateral swaps as crisis finance instruments reinforce the GFSN hierarchy. Since access to adequate emergency liquidity is decisive for a country’s financial crisis prevention capacity and the ability to engage in social cohesion and climate policy, we suggest to flatten the hierarchy by keeping access to IMF unconditional finance open beyond the COVID-19 crisis, expanding regional financial arrangements, and by coordinating GFSN elements, including currency swap providing central banks

Opinion: Brazil cannot ignore the looming global debt crisis

As it looks to lead on global green ambition, Brazil has a chance to play a mediating role in debt crisi