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We analyse the determinants of RMB as an international reserve currency and the impact of joining the Special Drawing Rights (SDR) on the currency swap agreements between China and other countries....

The presented study analyzes the reasons for the need to move away from the US dollar (hereinafter referred to as the dollar) as a universal means of payment in international trade based on the existing threats, examines alternative means of international payments, and identifies their benefits and drawbacks in the context of Russia’s economic security.Aim. The study aims to identify and characterize the means of international payments that fall in line with Russia’s strategic priorities from the perspective of economic security.Tasks. The author considers the risks of using the dollar in international payments and reserves, assesses various means of international payments from the perspective of Russia’s strategic interests, and evaluates the possibility of substituting the dollar with alternative means of international payments.Methods. This study analyzes information from the International Economic Forums, statistics of the Central Bank of Russia, Federal State Statistics Service, Decree of the President of the Russian Federation on the economic security strategy of the Russian Federation until 2030, reports of news agencies, and works of Russian and foreign authors on the subject.Results. Based on the results of the conducted study, the author draws several conclusions. Due to many factors, the most important of them being the volume of trade in dollars, the dollar will remain the world’s leading currency in international trade. However, given that de-dollarization is a global process, the existing trends will amplify. A supranational currency is unlikely to appear for a number of reasons. First, the obvious opposition of the United States due to its unwillingness to let go of such a powerful lever of economic well-being and political influence as the use of the dollar as a global means of payment. The US would probably agree to creating a supranational currency in the medium term if the global process of de-dollarization reaches critical values. Second, the financial and trade centers of the euro and renminbi area are likely to focus on developing their own currencies, especially given the growing global GDP and China’s trade. Creating a supranational currency based on the existing structure of the International monetary Fund (hereinafter — the IMF), following the example of Special Drawing Rights (SDR), with the IMF virtually controlled by the United States, will not eliminate the threat of the currency being used as an instrument of political pressure on individual countries. Replacing the dollar with such kind of supranational currency does not serve the interests of Russia’s economic security. A potential alternative involves creating a supranational currency based on a structure that is independent of the IMF. In this case, the obstacles would include the obvious opposition of the US and its allies and the potential influence of the US on the emission of the supranational currency using its foreign political resources to affect the decisions made by other countries. Using national currencies in international trade in the medium term under the influence of globalization would lead to a formation of multiple currency centers. These centers would most likely be the dollar, euro, renminbi, and ruble.Conclusions. The creation of a ruble-based International Monetary Center with the CIS, BRIC countries (except China), and Turkey serves Russia’s strategic interests. Further consolidation around the ruble would require implementing a financial sustainability policy, maintaining the stability of the macroeconomic environment, creating an international bank similar to the IMF with payments made in rubles, strengthening offshore ruble areas, and increasing high-tech exports.

The coronavirus aka Covid-19 pandemic arrived in Zimbabwe at a time when the country was in the throes of its worst economic turmoil in recent years. Within months of its arrival, the pandemic has already upended the public healthcare system, eroded the livelihoods of millions of people, and further deepened the economic headwinds in the country. Apparently, Zimbabwe has been in a crisis mode since the beginning of the 21st Century. As such, the pandemic has added an extra burden to the country that is already creaking under mounting weight of external debt peonage, fiscal deficit, liquidity crisis, and international isolation among many other social and economic ills. In this context, the country faces an uphill task in mobilising financial and non-financial resources in order to contain the coronavirus crisis. This article therefore sets out to examine the obstacles and opportunities for financing the fight against Covid-19 pandemic within a discursive context of a debt trapped Southern African country.

Purpose This paper is submitted for a special issue of Asian Education and Development Studies on the topic of Greater China Development. The purpose of this paper is to explore the challenges and opportunities of developing a free trade zone (FTZ)/free port in China’s Hainan island. Design/methodology/approach Hainan is to be Mainland China’s newest and largest FTZ. However, the experience of the existing Mainland FTZs is not encouraging, their limited, piecemeal reforms attracting little interest from foreign investors. To make a difference and provide a new engine of growth for the Mainland economy, the approach for Hainan needs to be much bolder. Hainan should aim to develop as a free port, a services centre and a financial centre. Findings Regarding the financial sector development, the opportunity should be taken to experiment with special drawing rights. Hong Kong can provide the exemplar and expertise to jump-start Hainan’s development. To provide critical mass, mutual access should be opened between Hainan and the nine Mainland municipalities of the Greater Bay Area. An inner border will be needed to distinguish the experimental area from the rest of the Mainland, and an outer border to preserve its integrity vis-à-vis the international environment. Originality/value If Hainan can be developed into the China Offshore Centre, it would have the potential to restart the Mainland’s stalled reform process, and to relieve international trade and financial tensions.

President Xi proposed building the Silk Road Economic Belt and 21st-Century Maritime Silk Road, which became known as the “Belt and Road” Initiative. In 2016, the RMB (Chinese currency) officially joined the SDR (Special Drawing Rights), and the RMB’s entry is the integration of the Chinese economy into the global financial system. The internationalization of the RMB is the need for the development of global economic integration and the development of China’s international trade. This “initiative” provides strong support for the internationalization of the RMB. Besides, how to achieve balance in maintaining the country’s economic stability and promoting currency internationalization has always been a difficult issue faced by Chinese monetary authorities when the issue of “big country with small currency” presented. Based on the theory of internationalization of currency, this paper discusses the mutual promotion between RMB's internationalization and the "Belt and Road" initiative, the role of the "Belt and Road" Initiative as a driving force to RMB’s Internationalization.

Special Drawing Rights are reserve assets which ought to provide liquidity in times of a country’s financial distress. It is a potential claim on freely usable currencies of International Monetary Fund member countries. This article examines the possible effects of a global Special Drawing Rights implementation by the International Monetary Fund in case of a collapse of one of the major currencies. The question addressed is if a distressed fiat currency can be bailed out effectively by triggering the designation mechanism to the International Monetary Fund member countries The results indicate that the liquidity benefit per created Special Drawing Rights unit would proportionally increase with the rate of money supply.

This paper estimates the number of teachers required to meet different pupil-teacher (P-T) ratio targets in 2030 for all education levels in Eastern and Southern Africa (ESA). It also assesses the affordability of those targets based on different scenarios and presents detailed projections for the region as well as for 20 countries. To meet goals around education and learning, the model finds that governments in ESA will need to pay for more than five million additional teachers by 2030. When compared to affordability estimates, which reflect the latest teacher compensation spending trends, government investments will need to double. While there is variation across countries, the compounding shortage of teachers is a serious risk to improving learning across the region.These findings underscore the need to invest more resources in teachers and education systems more generally. If governments were able to progressively increase their investment in education to reach six percent of GDP in 2030, which is in line with the most ambitious target in the Incheon Declaration, it would be possible to recruit an additional three million teachers, which partially closes the gap. However, most governments will need to invest much more, including up to eight percent of GDP, to maximize learning opportunities and outcomes for all children in the region.Boosting investments in education systems is a particularly daunting task in the context of COVID-19 and the multitude of competing priorities. Nevertheless, governments are strongly encouraged to steadily increase the amount of resources allocated to the education sector each year, strengthen efforts to improve value for money and transparency in education spending processes, make the case to receive greater external support for education, and negotiate for debt relief that directly benefits the education sector, including through debt-for-education swaps.Boosting investments is particularly challenging in the context of COVID-19 and the multitude of competing priorities. However, governments can: (i) steadily increase the amount of resources allocated to the education sector in the annual budget cycle;(ii) convert some of the new Special Drawing Rights (SDRs) allocated by the IMF to invest in the education sector;(iii) strengthen efforts to improve value for money and transparency in education spending processes;(iv) develop compelling investment cases to receive greater external support for education from donors and international financial institutions;and (v) negotiate for debt relief that directly benefits the education sector, including through debt-for-education swaps.

We call for strengthening the Global Financial Safety Net (GFSN) to manage the economic effects of COVID‐19, in particular the massive capital outflows from emerging market and developing economies EMDEs and the global shortage of dollar liquidity. Both the United Nations (UN) and the International Monetary Fund (IMF) estimate that EMDEs need an immediate $2.5 trillion, yet the financing available to them is just $700 to $971 billion. To meet these immediate needs we propose to: (1) broaden the coverage of the Federal Reserve currency swaps; (2) issue at least $500 billion of special drawing rights through the IMF; (3) improve the IMF’s precautionary and emergency facilities; (4) establish a multilateral swap facility at the IMF; (5) increase the resources and geographic coverage of regional financial arrangements; (6) coordinate capital flow management measures; (7) initiate debt restructuring and relief initiatives; and (8) request that credit‐rating agencies stop making downgrades during the emergency. It argues that leaders should swiftly move to address these structural gaps in the GFSN: (1) agree on a quota reform at the IMF; (2) create an appropriate sovereign debt restructuring regime; (3) expand surveillance activity; and (4) adopt IMF governance reform and strengthen its relations with all agents of the GFSN. All of these reforms must be calibrated toward a just transition to a more stable, inclusive, and sustainable global economy.

A major issuance of special drawing rights (SDRs) through the International Monetary Fund would be a key tool to provide financial support to developing and emerging economies and limit the economic and financial fallout of the COVID-19 crisis. SDRs are an unconditional resource, and the case for such an allocation is very strong during an exogenous shock, such as the current one. An SDR allocation would enhance the international liquidity in the hands of emerging and developing countries, so that public responses to the health crisis are not imperilled by financial crises. Close to two-fifths of a new SDR allocation would directly go to developing and emerging economies. In addition, a new mechanism should be created through which countries that do not need their SDR allocation lend them to the IMF, to increase the Fund’s lending capacity. Developed countries can also allocate the SDRs they do not use for official development assistance.

After the global crisis of 2008&ndash, 2009, the world economy entered the era of restructuring. This article focuses on the risks that a new leader will face in the process of shaping the world economy. The methods employed in the research include big data processing of continuous change and the results of the symmetric macroeconomic analysis based on the statistics collected by the International Monetary Fund (IMF), The Word Bank (WB), Bank for International Settlements (BIS), Central banks and Treasuries. The study results proved that the recessionary processes, their depth and global nature, are caused by a combination of world financial system crises and general civilization problems. These new systemic risks for the world economy might result in new global crises that will limit the resources of international financial institutions for sustainable development. Besides, for most banks these crises will mean shifting a big share of derivatives to the off-balance liabilities, using Special Purpose Vehicle (SPV) in deals, followed by an increase in state and corporate debts, trade wars, a slowdown of economic development in China, and widening contradictions between global and national finances. Regular research and systematization have developed certain guidelines for the global economic restructuring process. First of all, it is recommended on the base of interstate compromises to focus on international agreements to ensure a solid foundation for global finance. On the basis of the comparative analysis carried out for the USA, China and other counties, it was made clear that no one leader in world economy in 21st century views the world reserve as based on the currency of one country only. Instead, there will be a slow transition to using Special Drawing Rights (SDR) with a basket from 15&ndash, 20 currencies G20.

As of this writing, the Trump Administration has blocked a proposed new allocation of the unique reserve asset issued by the International Monetary Fund (IMF), called the Special Drawing Right (SDR...

Since the end of the Bretton Woods era, the world has operated on a de facto system of free‐floating exchange rates, with the US dollar as the dominant international currency. The system, characterized by large pro‐cyclical capital flows and chronic imbalances, is inherently unstable, and has contributed to repeated crises, recessions and geopolitical tensions. One potentially “least‐difficult” line of reform would be to allow the evolution of a multi‐currency system, underpinned by an expanded role for Special Drawing Rights (SDRs). Attempts to promote wider use of the SDR have foundered on the liquidity premium. However, for Chinese corporations and institutions, at present restricted in their capital account activities, the SDR liquidity premium would appear less daunting. The Chinese authorities could provide policy encouragement for the use of SDRs by their institutions. This initiative, supported by China's Special Administrative Region Hong Kong, would kick‐start an international SDR ecosystem, and encourage even broader use of SDRs, to the benefit of international monetary stability.

This article examines China’s participation in the trade, monetary and development assistance fields and concludes that China’s rise does not undermine the centrality of the Bretton Woods institutions or Word Trade Organization (WTO) in global economic governance. Whereas China’s participation in the WTO presents some challenges to the long dominance of the United States and the European Union, it reaffirms the central role of the WTO. China’s monetary strategy also indicates the continuing importance of the International Monetary Fund (IMF) in the international monetary regime. Whereas the Asian Infrastructure Investment Bank (AIIB) introduces some competition to the World Bank and the Asian Development Bank (ADB), China’s efforts in establishing new multilateral development banks are mainly driven by its frustration with stalled reforms of the Bretton Woods institutions. By and large, China’s economic emergence does not challenge, but reaffirms, the post-World War II global economic architecture.

In November 2008 the G20 became the premier forum for international economic and financial affairs. As a result, the international monetary system has come to reflect the transformation of the global economy brought about by China’s emergence as the second largest economy and major exporter, and by the related limits of international governance, especially of the so-called Bretton Woods institutions. This article argues that Zhou Xiaochuan, governor of the People’s Bank of China, started an international debate about the shortfalls of the international monetary system in March 2009, after which China pursued the internationalization of its own currency, the renminbi, to turn it into one of the key international currencies. To this purpose, China has put together a policy framework that facilitates the international use of the renminbi without opening domestic capital markets - a requisite for a fully convertible international currency. This article discusses the renminbi’s trajectory over the last five years and suggests that it has become more regionalized rather than internationalized. It also discusses the challenges that Chinese authorities experience as they try to put the renminbi in the pockets of foreign investors and at the same time maintain control - “managed convertibility” - of capital flows in and out of the domestic market. The article concludes that the decision to include the renminbi in the International Monetary Fund’s basket for its special drawing rights reflects expectations that the international monetary system will shift from a dollar-dominated to a multi-currency system. However, this will take several years; in the meantime, international governance will continue to reflect the influences of the issuers of the key international currencies.

Despite the spread of budget initiatives for gender equality following the Beijing Declaration of 1995, resources allocated for eliminating gender inequalities remain inadequate. This paper proposes to create a Global Fund for Women through Innovative Finance (GFWIF) with the ability to raise funds through innovative sources of finance on a scale more appropriate to the estimated requirements of making reasonable progress toward gender equality (US$31–107 billion per year in constant 2014 dollars). It builds on previous calls by feminist economists for the establishment of such funds through global forms of taxation. Since donors’ commitments only meet the lower bound, the GFWIF could scale up funding for gender equality interventions commensurate with country needs. Global resource mobilization through innovative mechanisms, including allocations of new Special Drawing Rights, currency transaction taxes, and carbon taxes, have the potential to provide the necessary financing at a much faster pace...

The global financial crisis dominated the international financial landscape during the first 20 years of the 21st century. This paper assesses the contribution of the international coordination of economic policies to contain the crisis. The paper evaluates international efforts to diagnose the crisis and decide on appropriate responses, the treatments that were agreed and adopted, and the successes and failures as the crisis unfolded. International economic policy coordination eventually contributed importantly to containing the crisis, but the authorities failed to agree on a diagnosis and the consequent need for joint action until the case was obvious. The policy actions that were adopted were powerful and effective, but they may have undermined prospects for coordinated responses to crises in the future.

The major international financial crises of the past decades have shown that the international monetary system that evolved in an ad hoc way after the collapse of original Bretton Woods arrangements in the early 1970s must be reformed in a comprehensive way. This is particularly important from the point of view of emerging and developing countries, which are subject to strong boom-bust cycles in external financing, must “self-insure” to the associated risks through the accumulation of large foreign exchange reserves, severely face the inadequacies of the crisis management facilities currently available, and have inadequate voice and participation in the governance of the system. On the basis of an analysis of the system, this chapter proposes reforms in seven areas: (i) a better international reserve system than the current fiduciary dollar standard, and particularly one that makes counter-cyclical allocations of IMF’s Special Drawing Rights (SDRs) that increase international liquidity during crises and help fund counter-cyclical IMF lending; (ii) better instruments to guarantee the consistency of national economic policies of major countries; (iii) a system of managed exchange rate flexibility that promotes stability and avoids negative spillovers on other countries; (iv) the regulation of cross-border finance to mitigate the pro-cyclical behavior of capital flows; (v) appropriate balance of payments financing during crises, particularly through financing facilities that are automatic or have simpler prequalification processes and simpler or no conditionality, to overcome the stigma associated with borrowing from the IMF; (vi) adequate international sovereign debt workout mechanisms; and (vii) reforming the governance of the system through a more representative apex organization than the current G-20, stronger voice of developing countries in the IMF, and a “dense” architecture, in which the IMF is complemented with regional and interregional institutions.

In this chapter Muddiman draws together the issues identified in previous Chapters and sets out to establish an alternative model for bringing together the environment and economics paying particular attention to both the concept of Ecosystem Services and the potential to embed environmental issues firmly within the financial framework. In particular, this Chapter looks critically at issues of credit provision, land ownership and property rights and the use of sound money. This Chapter presents a completely new approach to environmental valuation. It proposes the establishment of a biodiversity backed financial vehicle, as part of the Special Drawing Right system of the IMF, using blockchain technology to facilitate its use as a global means of settling international debts.

The International Monetary Fund (IMF), also known as the Fund, was established in July 1944 as a product of the Bretton Woods conference, with the objective of formulating and implementing monetary arrangements pertaining to exchange rates and international payment mechanisms. In 2012, however, the Fund’s mandate was upgraded to give it more responsibilities encompassing issues that pertain to international macroeconomic and financial stability. Thus, in a way the IMF has turned itself into many things, including a financial and macroeconomic advisor, a trade promoter and a development agency, functions that are invariably performed by other international organisations. The IMF portrays itself in a way that is not accepted universally.

Purpose The purpose of this paper is to consider the implicit effect of the underlying foreign currency exposure on the performance characteristics of country exchange traded funds. Design/methodology/approach To arrive at an overall estimation of the exchange-traded fund (ETF)’s tracking error, the mean of the three measures of tracking error was calculated for both the hedged (r_LC) and unhedged (r_NAV) return series. Since tracking error does not capture all the risk inherent in a country index fund, the study extends the analysis using the Sortino and Modified Sharpe ratios. Findings The decision to hedge currency risk should not be taken on the sole basis of historical volatilities. The investor must also factor in transactions costs, the possible roll of futures contracts and prevailing interest rate differentials. If the rate on the foreign currency is greater than the dollar (euro) rate, the investor will pay for the hedge. If the rate on the foreign currency is less than the dollar (euro) rate, the investor will gain on the trade. Given that hedging entails additional costs, in cases where the neutralization of currency volatility only reduces risk modestly, it would be advisable to leave the exchange rate risk unhedged. We propose two metrics for ETF investors deciding whether to hedge a country ETF’s underlying currency risk. Originality/value The results highlight a key finding: while the majority of country funds accurately track the performance of the underlying foreign index when measured in the local currency, returns in the fund currency can be much more volatile. In breaking down the sources of country fund volatility, the paper demonstrates the impact of the underlying currency movements on overall fund risk. In cases where the currency impact has a significant impact on fund tracking errors, an index-oriented investor benefits from neutralizing the exchange rate effect. Additionally, as the Sortino and Modified Sharpe measures suggest that the underlying currency exposure offers in most cases a better risk-adjusted return for country exchange-traded funds (ETFs) in the listing currency, we also calculate the risk minimizing foreign currency exposure for each fund and propose a decision rule based on the net currency variance to decide whether to hedge the ETF’s currency risk. The optimal hedge ratio indicates that US-based investors should only partially hedge the underlying currency risk while European-based investors are better off fully hedging currency risk.

Up until now, the Renminbi (RMB) reform has been progressing gradually. With the RMB becoming a Special Drawing Right (SDR) component currency, China’s monetary policies will exert significant influence on the international marketplace. The year 2014 witnessed the weakening of the RMB against the U.S. dollar, yet thanks to China’s prudent economic policies, the RMB stopped depreciating further and remained quite stable for the first half of 2015, which benefited not only China itself, but also the United States, Japan, and other Asian economies. Asian markets used to be strongly influenced by the U.S. monetary policy and the performance of the U.S. dollar. However, since the RMB devaluation against U.S. dollar in the summer of 2015, Asian markets have been inclined to move in accordance with the market information from China rather than that from the United States. Although the RMB is not a currency like the euro that has been adopted by a number of countries, it can still exert great impacts on emerging economies in the world. For the RMB to take hold globally, improved fundamentals in emerging economies, an easing in the influence of the RMB-USD exchange rate, and a healthy financial system in China are all necessary. Meanwhile, both China and the United States need to enhance their coordination on macroeconomic policies and guarantee the stability of RMB-USD exchange rate.

The purpose of the paper is to analyze theoretical and practical aspects of the features of the IFI influence on transformation of national currency systems of such organizations’ member states. Defining features of interaction policy among national economies and IFI in the monetary sphere, considering countries’ socio-economic parameters of development, will allow monetary authorities to achieve the optimum level of development of its economy. Methodology. Theoretical base of the study are the provisions of general scientific theory of knowledge studied phenomena and processes, in particular: methods of induction and deduction (in determining classification criteria of IFIs impact on national currency system), analysis and synthesis (in determining the features and priorities of national currency system), comparisons, associations and analogies (the justification of characteristics of advantages and disadvantages of IFI). The information base for scientific research is scientific papers and publications of domestic and foreign scientists-economists, materials of scientific-practical conferences, legislative and normative documents, the IMF, World Bank and Asian Infrastructure Investment Bank materials. Results. Theoretical approaches to the definition of the national currency system and international financial organizations, including its classification, are proposed. It is proved that the IMF makes active impact on national currency policy formation through regulation and supervision, while the World Bank and AIIB are related in a passive way. The IFI regulation trends are to implement floating exchange regime, liberal currency transactions, cancel currency restrictions in member countries. Although it refers to all countries, some of them with large population, trading, underdeveloped institutions of democracy could avoid some IFI pressure. Practical implications. The study accents attention on the specifics of the IFI activity in terms of changing the currency policy of member countries. Comparison of priorities among national currency policy and IFI recommendations could be applicable for national authorities in performing national currency policy. Value/originality. Despite the existing studies in the field of international monetary policy, there is a gap in theoretical definition of interaction between IFI and national monetary authorities in the field of national currency policy forming at present. This article brings new approaches to the IFI classification and approaches to the definition of IFI characteristics in terms of impact on currency policy of member country.

The paper analyses the official use of international currencies as reserve currency (store of value) and anchor currency (unit of account). Examining the role as a reserve currency we note that the US dollar is the main reserve currency even if it recorded a decline given the decrease of the value of the US dollar reserve holdings and the gradual diversification of the currencies used. Since 2010, the euro's share decreased continuously may be due to the Eurozone crisis and the euro's depreciation against the US dollar. Then we show that the US dollar dominates as an anchor currency, though it was temporary abandoned during crisis time, having more than a regional dimension. At the same time, the use of the euro in exchange rate arrangements appears mainly in the regions that have close links with the euro area. Over the last few years, we have witnessed a gentle orientation towards a multimonetary world, especially regarding the use of the international currencies as reserve currency given the diversification of the currencies in which central banks understand to hold international reserves and the increasing share of the nontraditional currencies in total foreign exchange reserves.

Chapter 21 points out that, beyond the Cold War, there has been a structure of asymmetrical global power relations of Western nations and multilateral institutions that has disadvantaged sub-Saharan Africa. The author expands on the Bretton Woods institutions—the World Bank and the International Monetary Fund—which he claims to be the greatest purveyors of poverty in Africa. The chapter recommends reform measures for the WTO and IMF that would discard neoliberal Western-dominated agendas through giving African states more voice and leadership in these institutions.

The OIC intra-trade reached 17% in 2012 and the member countries have committed to increase it to 20% by 2015. The 5 th OIC Consultative Group Meeting on enhancing OIC intra-trade recommended the establishment of Trade Finance Support Schemes, as one of the driving factors, to accelerate the dynamic of the OIC intra-trade. Meanwhile, the United Nations World Economic and Social Survey (2012) considered that issuing new SDRs constitutes one of the solutions for the international community to mobilize additional resources for Development Finance. In this paper, we suggest the creation of Trade-based Special Drawing Rights (T-SDRs) among the OIC member countries to be issued by a dedicated regional financial institution on a regular frequency and according to a special mechanism. We discuss the allocation mechanism and its practical implementation among which the option to assign the role of issuance and clearing house to the Islamic Development Bank.