China vs. U.S.: IMS Meets IPS


Farhi, Emmanuel, and Matteo Maggiori. 2019. “China vs. U.S.: IMS Meets IPS.” American Economic Review, Papers and Proceedings 109 (May): 476-481.
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Currently both the International Monetary System (IMS) and the International Price Systems (IPS) are dominated by the U.S. The emergence of China, both as reserve currency and as a currency of invoicing, is likely to disrupt this status quo. We provide a framework to understand the forces that will shape this transition and identify sources of instability. We highlight the risk of an abrupt shift triggered by a run on the dollar.

Last updated on 08/26/2019