Positions and Prospects of Emerging Market Economies Currencies

DOI: 10.20542/0131-2227-2023-67-1-16-24
M. Golovnin, mgecon@mail.ru
Institute of Economics of the Russian Academy of Sciences, 32, Nakhimovskii Prosp., Moscow, 117218, Russian Federation.

Received 12.09.2022. Revised 24.10.2022. Accepted 02.11.2022.

Acknowledgements. The article was prepared based on the results of studies carried out at the expense of budgetary funds on the state assignment of the Financial University for fundamental research work “Competition of currencies in the international monetary system”.

Abstract. Over the past two decades of the 21st century, there has been an increase in the role of the currencies of emerging markets in the global foreign exchange market, but their positions in the international monetary system have not significantly changed. The article demonstrates the continuing gap between the role of the leading emerging market economies in the global economy and finance and the position of their currencies in the international monetary system. This gap is driven by lower liquidity premiums for the currencies of EME countries, relatively underdevelopment of their financial systems and greater financial instability, restrictions on the placement of securities denominated in national currencies on international financial markets, as well as geopolitical factors (including the risks of imposing sanctions regimes by the developed countries). It is shown that the internationalization of the EME currencies is facilitated by such factors as internal financial stability, the relative development of national financial markets and a significant role of issuing countries in world trade. On the example of China, the relative success of the policy of internationalization of the yuan is shown, on the example of Mexico and Russia, the role of participation in regional integration associations to expand the external circulation of national currencies. There is an increase in the role of geopolitical factors in determining the positions of individual EME currencies, especially since 2022. The scenario of fragmentation of the international monetary and financial system is considered, which implies a relative weakening of the positions of current leading world currencies with a relative strengthening of the positions of the individual EME currencies (primarily Chinese yuan). Measures are proposed to strengthen the positions of EME currencies in the new geopolitical conditions: activation of interaction processes in regional and mega-regional associations, formation of payment and settlement systems within them in national currencies using digital technologies, creation of regional markets for securities denominated in national currencies, the conclusion and activation of multilateral currency swap agreements between the central banks of EME countries.

Keywords: international monetary system, global foreign exchange market, emerging market economies, currency internationalization, currency hierarchy


1. Strange S. The Politics of International Currencies. World Politics, 1971, vol. 23, pp. 215-231.

2. Cohen B.J. The Geography of Money. New York, Cornell University Press, 1998. 248 p.

3. Butorina O.V. International Currencies: Integration and Competition. Moscow, Delovaya Literatura, 2003. 366 p. (In Russ.)

4. De Souza L.O.B. Currency Internationalisation and Currency Hierarchy in Emerging Economies: The Role of the Brazilian Real. (PhD Thesis). University of Leeds, 2019. 235 p. Available at: https://etheses.whiterose.ac.uk/24021 (accessed 16.08.2022).

5. Kenen P. Currency Internationalization: an Overview. Currency Internationalisation: Lessons from the Global Financial Crisis and Prospects for the Future in Asia and the Pacific. BIS Papers, 2011. Available at: https://www.bis.org/publ/bppdf/bispap61.pdf (accessed 16.08.2022).

6. Helleiner E., Kirchner J. The Future of the Dollar: Whither the Key Currency? Helleiner E., Kirchner J., eds. The Future of the Dollar. New York, Cornell University Press, 2009, pp. 1-24.

7. Maziad S., Farahmand P., Wang S., Segal S., Ahmed F. Internationalization of Emerging Market Currencies: A Balance Between Risks and Rewards. IMF Staff Discussion Note (SDN/11/17), 19.10.2011. 25 p.

8. De Paula L.F., Prates D.M., Fritz B. The Metamorphosis of External Vulnerability from ‘Original Sin’ to ‘Original Sin Redux’: Currency Hierarchy and Financial Globalisation in Emerging Economies. IE-UFRJ Discussion Paper, 2020, no. 033. 34 p. Available at: https://www.researchgate.net/publication/345458066_The_metamorphosis_of_external_vulnerability_from_'original_sin'_to_'original_sin_redux'_Currency_hierarchy_and_financial_globalisation_in_emerging_economies (accessed 16.08.2022).

9. Powell A. Promoting the International Use of Emerging Country Currencies: The Case of Local Currency Debt Issuance for Latin America and the Caribbean. Asian Development Bank, 2014. 18 p. Available at: https://www.cigionline.org/publications/promoting-international-use-emerging-country-currencies-case-local-currency-debt (accessed 16.08.2022).

10. Lahet D., Prat S. Internationalisation of Emerging Market Currencies and Original Sin: Empirical Evidence. The World Economy, 2021, vol. 44, iss. 7, pp. 1973-2003.

11. Levy N. The Internationalization of Local Currencies of Emerging Countries: the Experience of the Mexican Peso and the Chinese Renminbi. Brasilian Keynesian Review, 2018, vol. 4, no. 1, pp. 14-34.

12. Internationalization of the ruble: prospects and risks, as well as the role of the Russian ruble in foreign economic relations. Moscow, Bank of Russia, July 2017. 10 p. (In Russ.) Available at: https://cbr.ru/Content/Document/File/16745/01.pdf (accessed 16.08.2022)

13. Golovnin M.Yu. Exchange rate and external shocks in Russian economy. Mir peremen, 2018, no. 4, pp. 56-72. (In Russ.)

14. IMF Annual Report. 2020. Appendix II. Washington, IMF, 2020. Available at: https://www.imf.org/external/pubs/ft/ar/2020/eng/downloads/appendix.pdf (accessed 16.08.2022).

15. De Conti B. The Internationalization of the Chinese Renminbi: Firm Steps, But a Long Road Ahead. E-International Relations, 24.11.2020. 4 p. Available at: https://www.e-ir.info/2020/11/24/the-internationalization-of-the-chinese-renminbi-firm-steps-but-a-long-road-ahead/ (accessed 16.08.2022).

16. 2021 RMB Internationalization Report. Peoples Bank of China, 2021. 76 p. Available at: http://www.pbc.gov.cn/en/3688241/3688636/3828468/4434999/4433239/2021122809344466286.pdf (accessed 16.08.2022).

17. Park Yu.Ch., Wyplosz Ch. International Monetary Reform: A Critical Appraisal of Some Proposals. Kawai M., Lamberte M.B., eds. Reform of the International Monetary System. An Asian Perspective. J.P. Morgan, Springer, 2014, pp. 19-40.

18. Chan E., Packer F., Remolona E.M., Chui M. Local Currency Bond Markets and the Asian Bond Fund 2 Initiative. Basel, Bank for International Settlements, 15.07.2011. 34 p. Available at: https://www.bis.org/publ/othp15.pdf (accessed 16.08.2022).

19. Morozkina A. Sovereign bond fund in local currencies: prospects for BRICS countries. (In Russ.) Available at: http://www.nkibrics.ru/posts/show/59e51bce6272697ac4170000 (accessed 16.08.2022).


1. Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives Markets in 2019. Basel, Bank for International Settlements, 2019. Available at: https://www.bis.org/statistics/rpfx19.htm?m=6%7C381%7C677 (accessed 16.08.2022).

2. Ministry of Economy called the conditions for creation of new reserve currency of BRICS. RBC, 27.06.2022. (In Russ.) Available at: https://www.rbc.ru/economics/27/06/2022/62b978959a7947156fb7f3d3 (accessed 16.08.2022).

For citation:
Golovnin M. Positions and Prospects of Emerging Market Economies Currencies. World Eonomy and International Relations, 2023, vol. 67, no. 1, pp. 16-24. https://doi.org/10.20542/0131-2227-2023-67-1-16-24 EDN: ELPJMX

Comments (0)

No comments

Add comment






Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies


Current Issue
2024, vol. 68, No. 7
Topical Themes of the Issue:
  • The Supporting Structure of Global Security
  • Institutional Features of the Fourth Energy Transition
  • The Evolution of Modern German Christian Democracy
  • The Monarchies of the Persian Gulf and Central Asia
Submit an Article
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.