Finally out #openaccess! Why does the largest trading bloc on the planet have a miniature-sized currency? With Trump, the EU will again much regret this. 🎈We set out to theorise failure and develop a new IPE perspective that foregrounds offshore money. Quick thread 🧵 - ThreadSky

jvtk.bsky.social • 20 days ago

Finally out #openaccess! Why does the largest trading bloc on the planet have a miniature-sized currency? With Trump, the EU will again much regret this.

🎈We set out to theorise failure and develop a new IPE perspective that foregrounds offshore money.

Quick thread 🧵

Reposted from JEPP Journal

Markets won’t do it alone ❌

@jvtk.bsky.social and @steffenmurau.bsky.social argue that euro internationalisation keeps falling flat without active offshore monetary governance 👇

Comments

jvtk.bsky.social•20 days ago

The failure of euro internationalizing is baffling. We show that the euro is used in just 31% of FX transactions—barely more than the D-mark before the euro launched. Even European firms often prefer to trade in dollars.

jvtk.bsky.social•20 days ago

The Fed and the Treasury have boosted the dollar’s international status since the 1950s. The EU wanted a “multipolar monetary regime” (1990) but had barely a strategy: "market-led" internationalization building on the ECB’s reputation for… price stability. Why?

jvtk.bsky.social•20 days ago

We do a deep dive into the theory of currency internationalization. From the 1990s onwards, the EU thought of money mostly as a store of value and medium of exchange, neglecting money creation, in particular offshore - a bias that reflected a distorted reading of 1980s IPE scholarship.

jvtk.bsky.social•20 days ago

Building on our earlier article on monetary sovereignty, we highlight offshore money *creation* and the importance of monetary governance. A currency's global role relies on proactive state action. The EU has failed to develop its "offshore monetary governance".
https://www.cambridge.org/core/journals/perspectives-on-politics/article/rethinking-monetary-sovereignty-the-global-credit-money-system-and-the-state/33EE76D8B70FB954A03BF1124B79AA5C

steveroth.bsky.social•20 days ago

Quick explanation of relationship between money (read: bond) creation/issuance and offshore monetary governance? Thx.

jvtk.bsky.social•20 days ago

This?

jvtk.bsky.social•20 days ago

We highlight three own goals of failed internationalization:
1. Non-existent euro value chains locked the EU into disastrous dollar denominated fossil fuel imports
2. Wavering and weak ECB swap line policies (limited, conditional, unattractive)
3. That rare beast “a euro denominated safe asset”

jvtk.bsky.social•20 days ago

Lack of euro denominated safe asset reflects dumb EU debt rules, but also monetary policy choices and the ECB’s insane reliance on sovereign credit ratings, resulting in a minuscule €4.1 trillion in euro denominated safe assets compared to $21 trillion US safe assets.

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