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Liburkina L. M.

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Modern Reserve Currencies: Debt Stability of the Reserve Currency Emitting Countries
Shuba O. А., Travkina K. V.

Shuba, Olena А., and Travkina, Karyna V. (2020) “Modern Reserve Currencies: Debt Stability of the Reserve Currency Emitting Countries.” Business Inform 1:29–36.
https://doi.org/10.32983/2222-4459-2020-1-29-36

Section: International Economic Relations

Article is written in Ukrainian
Downloads/views: 14

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UDC 336.278

Abstract:
The article is aimed at researching the level of debt stability of the countries that emit reserve currencies. The historical aspects of formation and development of the global structure of reserve currencies are considered in accordance with the functioning of existing currency systems. The current tendencies inherent in the institute of reserve currencies are analyzed. The State debt of the reserve currency emitters between 2000 and 2018 was explored, and the features of their debts were described. In view of the dominant positions of the US Dollar among reserve currencies, a retrospective analysis of the State debt of this country - emitter of reserve currency - is carried out. Also an analysis of securing the public debt by the United States, Great Britain, Japan, China, Canada, Australia, Switzerland and the Euro-zone is carried out. The results of the analysis suggest that the Swiss Franc and the Chinese Yuan are the most secured in terms of GDP together with gold and foreign currency exchange reserves among reserve currencies. Both Japan and the United States have a weak position as to debt stability. The hypothesis that most reserve currency emitting countries provide a high level of well-being of their population through a chronic balance-of-payments deficits, which leads to a constant increase in the State debt, is confirmed by the analysis results. Accordingly, a high standard of living in such countries is possible by using the resources acquired in debt. It is defined that this way of existence of reserve currency emitting countries is possible thanks to the virtual economy model. In addition, it is confirmed that the current reserve assets system does not provide an adequate level of stability on a global scale. The risks to the world economy are related to the vulnerability of the reserve currency emitters, specifically, in terms of the debt stability in these countries.

Keywords: reserve currencies, world currency system, emission of currency, debt stability, government debt, foreign currency reserves.

Fig.: 4. Tabl.: 4. Bibl.: 10.

Shuba Olena А. – Candidate of Sciences (Geography), Associate Professor, Associate Professor, Department of International Economics and World Economy, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)
Email: [email protected]
Travkina Karyna V. – Assistant, Department of International Economics and World Economy, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)
Email: [email protected]

List of references in article

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Shuba, O. A. “Rezervni valiuty u strukturi svitovoi valiutnoi systemy“ [Reserve Currencies in the Structure of the World Monetary System]. Visnyk Kharkivskoho natsionalnoho universytetu imeni V. N. Karazina. Seriia «Ekonomichna», no. 90 (2016): 147-152.
Alfaro, L., and Kanczuk, F. “Debt Redemption and Reserve Accumulation“. NBER Working Paper 19098. Cambridge, 2018. https://www.nber.org/papers/w19098.pdf
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Prasad, E. “Has the dollar lost ground as the dominant international currency?“ Cornell University and Brookings Institution, 2019. https://www.brookings.edu/wp-content/uploads/2019/09/DollarInGlobalFinance.final_.9.20.pdf
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