A two-pronged approach to currency internationalization

• 成果类型: Article
• 署名作者: Liu, Qing; Luo, Wenlan; Niu, Jiatong
• 署名单位: Tsinghua University; Shanghai University of Finance & Economics
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2026.104309
• 发表日期: 2026
• 关键词: trade; MODEL; CHOICE

摘要

Policies aimed at promoting currency internationalization often target frictions in both capital and current account transactions. We study this two-pronged approach using a dynamic general equilibrium model in which an international currency serves as both a store of value and a medium of exchange. Due to the complementarity between different functions of an international currency, a two-pronged approach is more effective than policies with a single focus. We analytically characterize this policy complementarity and apply the model to China's renminbi internationalization reforms during 2010-2021. We find that: (1) These reforms reduced the return wedge on foreign held renminbi bonds by 4.1 percentage points (p.p.) and lowered the cost of renminbi-settled international trade by 0.9 p.p. in trade-revenue equivalent. (2) Policy complementarity accounted for half of the overall policy effect. (3) A single-focused policy - targeting only capital (current) account frictions - would have raised fiscal costs by a factor of 2.1 (1.8).