Year: 2022
Type: report
Abstract: We empirically characterize how China is internationalizing the Renminbi by staggering the entry of different types of foreign investors into its domestic bond market and propose a dynamic reputation model to explain this strategy.Our framework rationalize China's strategy as trying to build credibility as an international currency issuer while reducing the cost of capital flight.We provide a sufficient statistic to measure countries' reputation over time and show that it can be estimated using micro data on foreign investors' portfolios.We use our framework to explore how countries compete to become a reserve currency provider.
DOI: 10.3386/w30336
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
Award: CAREER: Global Capital Flows
OpenAlex ID: W4290695237