英国essay代写|如今的美元面对不同方面的挑战

英国essay代写|如今的美元面对不同方面的挑战

Different aspects of challenges that U.S. dollar faces today

历史已经出现变化，上升和下降的国际储备货币，以增加的作用，，英镑在十九世纪以及美元在第二十世纪兴起。欧元的出现影响了全世界多在很多方面，这不是一个疑问，它的引入改善欧元区金融市场的运作，特别从交易成本和特定国家经济风险角度）。这是事实，欧元正在迅速逼近美元的流动性和广度的欧元金融市场。但在这个层面上，美国元仍然保持其在国际金融市场上的主导作用，也许是因为其更大的金融市场规模或在利用金融资源的惯性。
本文的目的是分析美元面临的不同方面的挑战。欧元将超过美国美元，并成为领导的货币的机会是什么。

INTRODUCTION 简介
The history has seen changes, rises and falls of an international reserve currency, emerging with an increased role of sterling in the 19th century and replaced by U.S. dollar in the 20th century (Eichengreen, 2006; Flandreau and Jobst, 2006). The emergence of euro has influenced a lot the whole world in many aspects and it is not a doubt that its introduction improved the functioning of euro financial markets, especially if we look from the perspective of transaction costs and country specific economic risks (Freix, 2004). It is the fact that euro is rapidly approaching U.S. dollar in terms of liquidity and breadth of euro financial markets. But at this level U.S. dollar is still maintaining its leading role on the international financial markets, maybe because of its greater financial market size or the inertia in the use of financial resources.
The objective of this paper is to analyze different aspects of challenges U.S. dollar faces today. What are the chances for euro to surpass U.S. dollar and to become the leading currency.
The first section of the paper gives a brief history about an international currency development, the second and the basic part gives some theoretical aspects and reviews the ideas of different economists about the challenges dollar face. All these discussion leads to the final part - conclusion.

HISTORY 历史
Before the few decades of World War I, international gold standard emerged. It was gold bullion and not a gold coin standard, which was the 19th century innovation. It meant coin and paper money convertible into gold bullions. Britain was the world's preeminent trade nation making up 30% of the world's export in 1860; 20% in 1890 and the 60% of the world's trade invoiced and settled in sterling between the years 1860 and 1914, as it was appropriate for a lot of foreign suppliers for entering the British market. The preeminence of sterling until 1914 can be considered as the evidence of existing only one international currency at any point in time. It was sterling, replaced by dollar and we should guess what will be the next.
In 1914, the Federal Reserve System was established, which increased the attractiveness of the New York market as a financial center. During the post-World War II period, while Europe suffered with the consequences of the war and the countries with potential alternative currencies to the dollars, maintained a great capital controls. This explains the dominance of dollarin reserves during a long period after World War II and in addition, the rapid growth of US economy played a significant role in establishing dollar as an international currency (Eichengreen, 2005).
In 1944 major market economists gathered in Bretton Woods to discuss the post-war monetary system. Keynes developed the idea about advantages of creating an international currency-Bancor, but there was no political will from countries to give up their national currencies. At the period, U.S. was the strongest economy and the Breton Woods meeting agreed on creating International Monetary Fund that would be anchored to the dollar - the only international currency convertible into gold by central banks (Swaminathan S. Anklesaria Aiyar, 2009).
The balance of payment surplus with U.S. was the only way for other countries to earn dollars. In 1958, United States started to face large balance of payment deficits that was a result of Europeans trade surpluses. As an overall result, in 1971 U.S. closed the official gold window thus finishing the Bretton Woods regime. (Menzie Chinn, Jeffrey Frankel, 2005) All these facts had an influence on the development of U.S. dollar as an international currency.
Nowadays Euro, the currency which physically occurred in 2002 and is used by 12 European countries, may be seen as a future international currency, replacing U.S. dollar.

CHALLENGES TO THE DOLLAR 美元的挑战
In general, Money is defined in terms of three functions in domestic level: medium of exchange, unit of account, and store of value. In an open economy, where both real and monetary sectors of economics are interrelated on the international level, the unit of account should also be able to fulfill these three functions on an international level. While we speak about an international currency, official and private sectors should be distinguished. The following table summarizes the three functions of money:
First, country's share in world output and trade - It is more likely for other countries to use the currency of a country with a larger share as a monetary anchor (Eichengreen, 1998; Frenkel and Sondergaard, 1999; Frankel, 2000). Second, macroeconomic stability - Here we should mention that price stability is of a great importance in order to maintain the international role of currency (Hartmann and Issing, 2002). Third, financial market development - It is more likely to use those countries' currency for intervention purposes that are distinguished with their financial markets in terms of larger size and liquidity (Eichengreen, 1998). And the last but not least, network externalities -The more countries use a currency as a medium of exchange, the lower will be transactions costs and higher its liquidity, which makes it attractive for new users (Gaspar, 2004).
Empirical studies showed the very importance of those factors. The existence of these factors led the U.S. dollar to become the dominant currency. But at the same time, the factors of international currency status tend to change slowly inducing inertia (Cohen, 2000). The economists agree about the influences of the above mentioned factors, though there exist different views about the importance of each. According to Bergsten (1997), EU accounted for 31% of world output and 20% of world trade (excluding intra EU transactions). It is true that euro is more liquid than its predecessor currencies, but if its liquidity is more compared to U.S. dollar it is arguable (Galati and Tsatsaronis, 2003). The dollar's share on the international market decreased from 94% in 1998 to 89% in 2004. Dollar/Euro was the best traded currency pair in 2004 occupying 28% of global turnover, compared with U.S. having 27% of world output and 18% of the world trade. At the same time Bergsten/Mundell see euro's role as a stable store of value. Mundell stated: "diversification effects are inevitable" and "the fact that the bulk of international reserves are held in dollars makes that currency a sitting duck in a financial crisis".
McKinnon (1998) believes euro may become the world's most important regional currency. His ideas are based on the premises of large economic size, which is the main factor to suggest a role for euro beyond its political borders, though the economist believes it will not be able to replace U.S. dollar. Only events like massive inflation in the United States, causing destabilization of dollar's value in terms of goods and services, may lead to displacing the currency from its leading position. Mckinnon also speaks about dollar as a vehicle currency. It accounts about 90% of interbank transactions outside Europe and represents the main invoice currency for primary commodities such as oil, copper and wheat, as well as the developing and smaller industrialized countries use dollar as their exports' main invoice currency. Dollar is the main intervention currency and previously discussed factors (vehicle and invoice currencies) also facilitate this role, as it is cheaper and more efficient to intervene with this currency. For the reserve currency, governments use the one they can use in intervention. Hence dollar occurs to be the major reserve currency as well. McKennon emphasizes the role of dollar as a nominal anchor in two ways: Firstly, as a limitation to the exchange rate fluctuation, and secondly, to avoid adverse balance sheet effects in different countries. If we look to the international dollar debtors, they tend to peg to the dollar in normal times. On the other hand, there are international dollar creditors - countries as China and Japan that find it difficult to lend abroad in their domestic currencies. They are concerned because in case of domestic currency significant appreciation against the dollar, their financial institutions may face bankruptcy.
Kenen (2002, 2003) emphasizes the importance of dollar's role as an exchange vehicle in third currency markets. For example: Instead of changing one currency to another (bilateral exchange), it is possible to convert these two currencies using dollar as a vehicle. Thus, it is difficult to challenge dollar in these terms.
Cooper (1997) focuses on the importance of the liquid and well-developed U.S. financial markets. If in terms of size, the US Treasury and EMU do not differ, there is still one very important difference: The U.S. market is homogenous, while EMU market is heterogeneous: Debts are denominated in euros, but have different credit quality and liquidity risk premia, because they are issued by the different governments. Based on this explanation, Cooper states that: "major displacement of the dollar will not take place, at least several decades." In contrast to the above mentioned arguments of different economists, Eichengreen (2005) argues that "market liquidity is not all that matters." He takes into consideration the U.S. current account deficit and explains that if U.S foreign debt grows relatively towards its GDP, the foreigners will lose the trust of the currency, and it will lead to the depreciation and inflationary pressures which make dollar less attractive. Eichengreen also states that dollar will face a classical cartel problem and individual interests will take over collective ones.

CONCLUSION 结论
Based on the discussion and idea developments given above, we may conclude the following: The challenge of the dollar in the future may be caused by two main factors: First, The structural change and further development of EMU - whether it becomes larger than the U.S. economy by joining the other 13EU members, especially UK, with its important financial market. And, the second - if U.S. dollar faces further devaluation.
In case of EMU changes and the lost confidence toward dollar, euro may become an attractive currency for a lot of investors. At the same time problems with dollar depreciation will cause a loose of leading position for U.S. dollar and give the opportunities to other currencies, like euro to become an advance international currency.

REFERENCES:参考文献
Ewe-Ghee Lim, 'The Euro's Challenge to the Dollar: Different Views from Economists', IMF Working Paper, WP/06/153, June 2006;
Gabriele Galati and Philip Woodridge, 'The euro as a reserve currency: a challenge to the pre-eminence of the US dollar?' BIS Working Paper, No. 218, Bank for International Settlements, October 2006;
Menzie Chinn & Jeffrey Frankel, 'Will the Euro Eventually Surpass the Dollar As Leading International Reserve Currency?, in Richard Clarida (ed.), G7 Current Account Imbalances, University of Chicago Press, 2007;
Benjamin J. Cohen, 'Global Currency Rivalry: Can the euro Ever Challenge the Dollar?, Global &International Studies Program, Paper 8, University of California, 2003;
Benjamin J. Cohen, 'Dollar Dominance, Euro Aspirations: Recipe for Discord?' University of California, JSMC 2009 Volume 47;
Barry Eichengreen, 'Sterling's Past, Dollar's Future: Historical Perspectives on Reserve Currency Composition', University of California, April 2005;
Swaminathan S. Anklesaria Aiyar, 'An International Monetary Fund Currency to Rival the Dollar? Why Special Drawing Rights Can't Play That Role', Development Policy Analysis no. 10, July 7, 2009.