This paper provides insights into the historical inefficiencies and instabilities of the international monetary system. These inefficiencies are primarily linked to the limited supply of international liquidity and wedges in various money-market rates. The instabilities encompass both...

This article provides an analysis of the economic cost incurred by the world through the use of the fiat international reserve currency since the end of the 1971 gold standard system. The article uses the Quantity Theory of Money to provide an empirical manifestation of how reserve currency...

China watchers have decried the emergence of the Cross-Border Interbank Payment System (“CIPS”) as a turning point in the move to dethrone the U.S. dollar. This Article situates CIPS, which clears and settles Chinese renminbi transactions, with other financial market infrastructures, drawing...

In this paper we highlight a new channel through which dollar fluctuations can become a self-fulfilling pro-cyclical force. We call this mechanism “Imperial Circle” as it makes the dollar the dominant macroeconomic variable in the context of the current international monetary system. At the...

We develop a two-country business-cycle model of the US and the rest of the world with dollar dominance in trade invoicing, in cross-border credit, and in safe assets. The interplay between these elements - dollar trinity - rationalizes salient features of the Global Financial Cycle in the data:...