Patterns in Invoicing Currency in Global Trade

39 Pages Posted: 12 Aug 2020

See all articles by Emine Boz

Emine Boz

International Monetary Fund

Camila Casas

Central Bank of Colombia

Georgios Georgiadis

European Central Bank (ECB)

Gita Gopinath

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Helena Le Mezo

affiliation not provided to SSRN

Arnaud Mehl

European Central Bank (ECB)

Tra Nguyen

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2020

Abstract

This paper presents the most comprehensive and up-to-date panel data set of invoicing currencies in global trade. It provides data on the shares of exports and imports invoiced in US dollars, euros, and other currencies for more than 100 countries since 1990. The evidence from these data confirms findings from earlier research regarding the globally dominant role of the US dollar in invoicing - despite the comparatively smaller role of the US in global trade - and the overall stability of invoicing currency patterns. The evidence also points to several novel facts. First, both the US dollar and the euro have been increasingly used for invoicing even as the share of global trade accounted for by the US and the euro area has declined. Second, the euro is used as a vehicle currency in parts of Africa, and some European countries have seen significant shifts toward euro invoicing. Third, as suggested by the dominant currency paradigm, countries invoicing more in US dollars (euros) tend to experience greater US dollar (euro) exchange rate pass-through to their import prices; also, their trade volumes are more sensitive to fluctuations in these exchange rates.

Keywords: International monetary system, Exchange rate policy, Balance of payments, Economic policy, Central banks, invoicing currency of trade, dominant currency paradigm, exchange rate pass-through, WP, share of export, pass-through, left panel, right panel, ECB

JEL Classification: F14, F31, F44, F1, E52, O24, G21, E01

Suggested Citation

Boz, Emine and Casas, Camila and Georgiadis, Georgios and Gopinath, Gita and Le Mezo, Helena and Mehl, Arnaud and Nguyen, Tra, Patterns in Invoicing Currency in Global Trade (July 1, 2020). IMF Working Paper No. 20/126, Available at SSRN: https://ssrn.com/abstract=3670607

Emine Boz (Contact Author)

International Monetary Fund

Camila Casas

Central Bank of Colombia ( email )

Cra. 4 # 7 - 14
Cali
Colombia

Georgios Georgiadis

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Gita Gopinath

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Helena Le Mezo

affiliation not provided to SSRN

No Address Available

Arnaud Mehl

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Tra Nguyen

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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