dollar as an external
anchor currency, instead of choosing an internal
anchor currency.
Europe experienced a similar development when, after the dismissal of the dollar-gold convertibility in the early 1970s, the Deutsche Mark started to act as the region's
anchor currency and the Bundesbank took the upper hand in European monetary policy.
But what gets lost in Steil's revisionist retelling is the other great contribution of Bretton Woods--a system that constrained speculative capital and created a bias in favor of economic expansion, quite apart from whether the
anchor currency was the dollar or Keynes's proposed bancor.
The
anchor currency was later switched from the pound sterling to the US dollar, but the 60 percent external asset backing was retained.
Perhaps a millionaire is an individual whose net wealth exceeds a sufficient amount of units of any currency when exchanged at a million units of the world's highest valued currency unit or the world's highest
anchor currency unit.
But even if the renminbi were fully convertible, the economic arguments for changing the
anchor currency are not well supported.
The next three chapters explore the prospects for East Asian economic integration, covering issues ranging from trade and economic diplomacy to the possibility of a monetary union with the yuan as the
anchor currency and its implications for South Korea.
If the clients adopt an
anchor currency independently, the joint probability that countries i and j use the currency of a common anchor k at time t is given by:
from having a stable and credible
anchor currency, and while the
Since the EA currency block based on the yen would imply the eventual replacement of the US dollar as an
anchor currency, neither could the US welcome the idea of the AMF, which could be seen as Asia's first step toward the formation of a currency block.
Pound sterling is expected to serve as an
anchor currency for some African and Asian countries.
In the context of the EMU it is worth mentioning that in addition to the German mark, Finnish markka and Swedish kronor, the ECU was also considered a possible
anchor currency for the Estonian CBA in 1992.
