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The evolution of the Offshore US-Dollar System: Past, present and four possible futures

Murau, S. ORCID: 0000-0002-3460-0026, Rini, J. and Haas, A. (2020). The evolution of the Offshore US-Dollar System: Past, present and four possible futures. Journal of Institutional Economics, doi: 10.1017/S1744137420000168

Abstract

Little has contributed more to the emergence of today's world of financial globalization than the setup of the international monetary system. In its current shape, it has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore-a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007-9 Financial Crisis, this 'Offshore US-Dollar System' has been backstopped by the Federal Reserve's network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy.

Publication Type: Article
Additional Information: © The Author(s), 2020. Published by Cambridge University Press. This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Publisher Keywords: China; Europe; Eurodollar; Federal Reserve; financial globalization; institutionalism; international monetary system; money; shadow banking; swap lines
Subjects: H Social Sciences > HG Finance
J Political Science > JZ International relations
Departments: School of Arts & Social Sciences > International Politics
Date Deposited: 15 Oct 2020 10:20
URI: https://openaccess.city.ac.uk/id/eprint/25097
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