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'' 'DOLLAR DOMINATION
DOMAIN' ''
DOLLAR DOMINATION : Why global markets depend on the US currency.
FROM the dominant reserve currency for central banks to the main conduit for global trade and borrowing, US dollars are the lifeblood for banks and markets right around the world.
A Fed research paper estimated in 2017 that as much as 70 percent of all dollars are held outside the United States and 60pc of all $100 bills circulated overseas.
Another Fed paper this year said roughly half the 1.6 trillion of dollar banknotes in circulation were outside the United States.
Markets got a reminder of the greenback's hegemony in September when a squeeze in overnight dollar funding rates in New York sent shivers across the world.
Governments and central banks have tried to reduce their dollar-dependency, with Bank of England governor Mark Carney describing its role in the world economy as ''destablising''. But de-dollarisation is likely to take many years.
Here are some ways the dollar is used :
Central bank reserve holdings
.- Reserves of different currencies are held by central banks to settle international claims., intervene in foreign exchange markets or as rainy-day funds.
.- Total reserves in US dollars were $6.79 trillion in the second quarter of 2019 more than 60 pc of the total, International Monetary Fund data shows.
.- As some countries, such as Russia, reduce their proportion of dollars, the greenback's share was the lowest since 2013, the IMF data showed.
.- The euro is the second most-popular reserve currency, accounting for 20pc of global holdings.
.- Since 2010, the Japanese yen's role as a reserve currency has declined to 5.4pc while the Chinese yuan has become more prominent, although represents just 2pc.
International payments
.- The dollar is dominant for transactions between non-US exporters and importers.
FROM the dominant reserve currency for central banks to the main conduit for global trade and borrowing, US dollars are the lifeblood for banks and markets right around the world.
A Fed research paper estimated in 2017 that as much as 70 percent of all dollars are held outside the United States and 60pc of all $100 bills circulated overseas.
Another Fed paper this year said roughly half the 1.6 trillion of dollar banknotes in circulation were outside the United States.
Markets got a reminder of the greenback's hegemony in September when a squeeze in overnight dollar funding rates in New York sent shivers across the world.
Governments and central banks have tried to reduce their dollar-dependency, with Bank of England governor Mark Carney describing its role in the world economy as ''destablising''. But de-dollarisation is likely to take many years.
Here are some ways the dollar is used :
Central bank reserve holdings
.- Reserves of different currencies are held by central banks to settle international claims., intervene in foreign exchange markets or as rainy-day funds.
.- Total reserves in US dollars were $6.79 trillion in the second quarter of 2019 more than 60 pc of the total, International Monetary Fund data shows.
.- As some countries, such as Russia, reduce their proportion of dollars, the greenback's share was the lowest since 2013, the IMF data showed.
.- The euro is the second most-popular reserve currency, accounting for 20pc of global holdings.
.- Since 2010, the Japanese yen's role as a reserve currency has declined to 5.4pc while the Chinese yuan has become more prominent, although represents just 2pc.
International payments
.- The dollar is dominant for transactions between non-US exporters and importers.
.- The proportion of invoices denominated in dollars is nearly five times the dollar share of the world's imports., data from the bank for International Settlements [BIS], an umbrella group of the world's central banks, shows.
.- Companies operating in global markets, such as the airplane-maker Airbus, often list their prices in dollars.
Former European Commission President Jean-Claude Juncker said it was ''ridiculous that European companies buy European planes in dollars instead of the euro.''
.- The BIS found 80pc of financing of trade between banks is in dollars.
Commodity pricing
.- Commodities such as oil and gold are typically denominated in US dollars, as are benchmark futures such as Brent.
.- Gulf oil producers peg their currencies to the dollar to avoid risk from fluctuations when invoicing their sales.
.- The dollars supremacy was highlighted in 2018 when Washington decided to re-impose sanctions on Iran and all those doing business with it - any country breaking sanctions risked having access to dollars cut off.
.- China has launched yuan crude futures which could eventually become a global price benchmark alongside Bret and WTI. But a pre-requisite would be liberalising China's capital account to allow free movement of money.
The Honor and Serving of the latest Global Operational Research on Dollar denomination and Global currency, continues. The World Students Society thanks Reuters.
With respectful dedication to the Leaders, Students, Professors and Teachers of the world. See Ya all on The World Students Society - for every subject in the world - : wssciw.blogspot.com and Twitter - !E-WOW! - The Ecosystem 2011:
''' Investments & Borrowing '''
.- Companies operating in global markets, such as the airplane-maker Airbus, often list their prices in dollars.
Former European Commission President Jean-Claude Juncker said it was ''ridiculous that European companies buy European planes in dollars instead of the euro.''
.- The BIS found 80pc of financing of trade between banks is in dollars.
Commodity pricing
.- Commodities such as oil and gold are typically denominated in US dollars, as are benchmark futures such as Brent.
.- Gulf oil producers peg their currencies to the dollar to avoid risk from fluctuations when invoicing their sales.
.- The dollars supremacy was highlighted in 2018 when Washington decided to re-impose sanctions on Iran and all those doing business with it - any country breaking sanctions risked having access to dollars cut off.
.- China has launched yuan crude futures which could eventually become a global price benchmark alongside Bret and WTI. But a pre-requisite would be liberalising China's capital account to allow free movement of money.
The Honor and Serving of the latest Global Operational Research on Dollar denomination and Global currency, continues. The World Students Society thanks Reuters.
With respectful dedication to the Leaders, Students, Professors and Teachers of the world. See Ya all on The World Students Society - for every subject in the world - : wssciw.blogspot.com and Twitter - !E-WOW! - The Ecosystem 2011:
''' Investments & Borrowing '''
Good Night and God Bless
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