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Key Currency

Key Currency

What is 'Key Currency'

The currency used as a reference in an international transaction or when setting an exchange rate. The key currency used is usually issued by a stable, developed country such as the United States. Central banks also hold key currencies in reserve (reserve currency).

Explaining 'Key Currency'

As a monetary practice, countries with smaller or less-dominant economies sometimes align their exchange rates with the dominant trading partner. The central bank of some developing countries may fix the exchange rate to the key currency, which has the effect of limiting monetary policy flexibility but can also increase confidence in the country's economy.


Further Reading

Global imbalances and the key currency regime: the case for a commodity reserve currencyGlobal imbalances and the key currency regime: the case for a commodity reserve currency
www.tandfonline.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

What ever happened to Germany? Is the decline of the former European key currency country caused by structural sclerosis or by macroeconomic mismanagement?What ever happened to Germany? Is the decline of the former European key currency country caused by structural sclerosis or by macroeconomic mismanagement?
www.tandfonline.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

Key currency competition: The Euro versus the dollarKey currency competition: The Euro versus the dollar
journals.sagepub.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

Inertia of the US Dollar as a Key Currency through the Two CrisesInertia of the US Dollar as a Key Currency through the Two Crises
www.tandfonline.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

Financial capital movements and central bank behavior in a two-country, short-run portfolio balance modelFinancial capital movements and central bank behavior in a two-country, short-run portfolio balance model
www.sciencedirect.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

The macroeconomic implications of a key currencyThe macroeconomic implications of a key currency
www.nber.org [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

Inertia in the key currencyInertia in the key currency
www.sciencedirect.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

Key currency status: An exorbitant privilege and an extraordinary riskKey currency status: An exorbitant privilege and an extraordinary risk
www.sciencedirect.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

Volatility of RMB and its Impact on Regional Currency Cooperation [J]Volatility of RMB and its Impact on Regional Currency Cooperation [J]
en.cnki.com.cn [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …

The key currency proposalThe key currency proposal
academic.oup.com [PDF]
… Without a key currency, countries would have to rectify long-run trade deficits or devalue their currency; unemployment would … at an unduly fast rate; for example, an import blockade, as under the scarce currency clause … International Journal of Finance and Economics, 9: 307–313 …


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