Use of currencies in international trade: any changes in the picture?

Trade is an important factor in establishing a currency as an international currency, notably by fulfilling the transaction/medium of exchange and unit of account motives of currency demand. A well prepared liberalization of currency use for international trade and foreign direct investment transactions can even be helpful in achieving the international investment and reserve currency status. While in the distant past the later was also linked to preponderance of a country in trade markets, it is now linked to the prevalence of the currency in international financial transactions, which supposes that the country in question engages at least partly in some liberalization of capital account transactions.

This paper shows theoretical and practical reasons explaining the current dominance of the US dollar and the euro in the invoicing of international trade. There is little doubt, though, that in the medium-to-long term the RMB will become a major currency of settlement in international trade. This is not only the current direction of government policy but also that of markets, as evidenced by the rapid expansion of off-shore trade payments in that currency. In the meantime, though, the US dollar and the euro are enjoying a near-duopoly as settlement and invoicing currencies in international trade. The stability of this duopoly is enhanced by a number of factors recently highlighted by economic analysis: coalescing, “thick externalities” and scarcity of international currencies are useful to explain that, until such time that RMB payments match at least the share of China in global trade, the US dollar and of the euro will remain the main currencies in the invoicing and payment of international trade.

Section 1 looks at the factors that determine the use of currencies in the invoicing and settlement of international trade. Section 2 looks at the actual reality of currency use for international trade flows, and short-term prospects for the development of a possible alternative to the use of the US dollar and the euro (in particular in Asia), the RMB.

N°: ERSD-2012-10

Autores:

Marc Auboin, World Trade Organization

Fecha de redacción: maio de 2012

Palabras clave:

cooperation with international financial institutions, coherence, G-20, financial crisis

Código JEL:

F13, F34, F36, O19, G21, G32

volver al principio

Declinación de responsabilidad 

Este es un documento de trabajo y se refiere, por consiguiente, a un estudio en curso. Refleja las opiniones personales de funcionarios o especialistas invitados y es el resultado de trabajos de investigación profesionales. No pretende reflejar la posición o las opiniones de la OMC o de sus Miembros ni la posición oficial de ningún funcionario. Los errores que puedan existir son responsabilidad de los autores. Pueden obtenerse ejemplares de este documento de trabajo en la Secretaría de la División, en la dirección siguiente: División de Desarrollo y Estudios Económicos, Organización Mundial del Comercio, rue de Lausanne 154, CH-1211 Ginebra 21, Suiza. Sírvanse indicar en su solicitud el título y el número del documento.

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