Currencies, Competition, and Clans

D Engelmann, J Hanousek, E Kocenda

Research output: Working paper

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We present a theoretical and empirical analysis of the question whether stability among the world anchor currencies (G3) is attainable. The theoretical model presented in this paper builds on a model of spatial competition and rests on a set of realistic assumptions related to the behavior of central banks, workings of exchange rate regimes, geography of money, and international monetary arrangements. We show that stability is attainable in the case of two anchor currencies, but not in the case of three. The empirical evidence provides some support for assumptions and conclusions of the model.
Original languageEnglish
Place of PublicationEgham
Publication statusPublished - Aug 2006


  • exchange rates
  • anchor currency
  • satellite currency
  • exchange rate regimes
  • central bank policy
  • monetary union
  • spatial competition
  • geography of money

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