Financial Deepening And The Global Currency Usage
Source: MIT SLOAN SCHOOL OF MANAGEMENT
There are many different determinants of global currency usage. This paper will focus on one: a demand for a country's financial liabilities due to financial deepening and liquidity. This focus does not to imply that financial market development is the only factor determining global currency usage, but as this paper will argue, it has been one of the most important determinants of demand for the dollar and will play an important role in determining the future of the euro. This topic is closely related to the financial crisis that is currently unwinding around the globe.