Burlachkov V.K.Moscow State Institute of International Relations of the Ministry of Foreign Affairs of the Russian Federation, Moscow, Russian Federation vkburl@gmail.com ORCID id: not available
Subject Money supply in global economy is a total of world currencies circulating outside the boundaries of their official jurisdictions. The balance of money demand and money supply is the main condition for sustainable global pricing process. The development of the global financial market predetermines the complication of money supply formation in the global economy. Objectives The study aims to examine the modern specifics of money supply formation in the global economy, define reasons for changes in the process of money supply formation, elaborate a methodological framework for increasing the efficiency of regulatory measures under financial sanctions. Methods The research involves methods of scientific abstraction, induction and deduction, synthesis, and comparative analysis. Results The paper describes the specifics of money supply formation in the global economy. I analyzed the aspects of modern mechanism of global money creation, defined the importance of monetary and macroprudencial policies and their roles in the global money supply, examined the function of the money mechanism of global economy under financial sanctions. Conclusions In the modern global economy, the money supply formation is a result of credit operations of commercial banks. These banks are able to undertake liabilities in any global currency through creating a deposit in this currency. The main volume of money supply in USD is created nowadays by other than U.S. commercial banks. However, this practice has not led to inflationary tendencies. Such a situation is predetermined by the effect of Basel standards that limit the credit activities of commercial banks.
Keywords: money supply, global economy, demand for money, inflation, deflation
References:
Murau S. Offshore Dollar Creation and the Emergence of the post-2008 International Monetary System. IASS Discussion Paper, June 2018, 47 p. URL: Link
He D., McCauley R.N. Eurodollar Banking and Currency Internationalization. In: Investing in Asian Offshore Currency Markets. UK, Palgrave Macmillan, 2013. URL: Link
McCauley R.N., McGuire P., Sushko V. Global Dollar Credit: Links to US Monetary Policy and Leverage. BIS Working Papers, January 2015, no. 483, 35 p. URL: Link
Ivashina V., Scharfstein D.S., Stein J.C. Dollar Funding and the Lending Behavior of Global Banks. Quarterly Journal of Economics, 2015, vol. 130, iss. 3, pp. 1241–1281. URL: Link
Fowler S. The Monetary Fifth Column: The Eurodollar Threat to Financial Stability and Economic Sovereignty. Vanderbilt Journal of Transnational Law, 2014, vol. 47, no. 3, pp. 825–860. URL: Link
Machlup F. Euro-Dollar Creation: A Mystery Story. PSL Quarterly Review, 1970, vol. 23, no. 94, pp. 219–260. URL: Link
Friedman M. The Euro-Dollar Market: Some First Principles. Federal Reserve Bank of St. Louis Review, 1971, vol. 53, no. 7, pp. 16–24. URL: Link
Ricks M. A Simpler Approach to Financial Reform. Regulation, 2013–2014, Winter, pp. 36–41. URL: Link
McLeay M., Radia A., Thomas R. Money Creation in the Modern Economy. Bank of England Quarterly Bulletin, 2014, Q1. URL: Link
Carpenter S., Demiralp S. Money, Reserves and the Transmission of Monetary Policy: Does the Money Multiplier Exist? Journal of Macroeconomics, 2012, vol. 34, iss. 1, pp. 59–75. URL: Link
Bernhardsen T., Kloster A. Misunderstood Central Bank Reserves. Norges Bank. Economic Commentaries, 2012, no. 1. URL: Link
Andresen T. Basel Rules, Endogenous Money Growth, Financial Accumulation and Debt Crisis. URL: Link
Holmes A., Klopstock F. The Market for Dollar Deposits in Europe. Federal Reserve Bank of New York Monthly Review, 1960, vol. 42, no. 11, pp. 197–203.
Clendennig E.W. Eurodollars and Credit Creation. International Currency Review, 1971, vol. 3, no. 1, pp. 12–19.
Makin J. Demand and Supply Functions for Stocks of Eurodollar Deposits. The Review of Economics and Statistics, 1975, vol. 57, no. 3, pp. 353–356. URL: Link
Schenk C.R. The Origins of the Eurodollar Market in London: 1955–1963. Explorations in Economic History, 1998, vol. 35, iss. 2, pp. 221–238. URL: Link
Stigum M., Crescenzi A. Stigum's Money Market. NY, McGraw–Hill Education, 2007, 1200 p.
Fels G., Sutija G. Protectionism and International Banking. UK, Palgrave Macmillan, 1991. URL: Link
Caswell R. Economic Sanctions and the Iran Experience. Foreign Affairs, 1981, vol. 60, iss. 2, pp. 247–265. URL: Link
Some Questions and Brief Answers about the Eurodollar Market. A Staff Study Prepared for the Use of the Joint Economic Committee. Congress of the United States. Washington, U.S. Government Printing Office, 1977. URL: Link.pdf
Fullwiler S.T. Setting Interest Rates in the Modern Money Era. Journal of Post Keynesian Economics, 2006, vol. 28, iss. 3, pp. 496–525. URL: Link
He D., McCauley R.N. Offshore Markets for the Domestic Currency: Monetary and Financial Stability Issues. BIS Working Papers, 2010, no. 320, 32 p. URL: Link
Rossi S., Rochon L.-P. Modern Theories of Money: The Nature and Role of Money in Capitalist Economies. Edward Elgar Publishing Limited, 2004, 648 p.