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The Shifting Dynamics Of International Reserve Currencies, Robert J. Righi
The Shifting Dynamics Of International Reserve Currencies, Robert J. Righi
Undergraduate Economic Review
With the recognition by the IMF of the Chinese renminbi as an international reserve currency in 2015, it is important to understand the modern influence of reserve currencies. We use currency exchange rate data and apply modified workhorse regression models to assign each country’s gross domestic product at purchasing power parity to a reserve currency bloc in order to obtain a global sphere of influence for each reserve currency. We find that the United States retains its dominance but faces challenges from the renminbi and the euro in recent years as the international monetary system becomes tri-polar.