Prospects of the Russian Ruble as a Regional Reserve Currency: Theoretical Approach

Abstract

In recent years the discussion of the role played by reserve currencies in the world economy has reached a new level. Problems caused by the domination of a single reserve currency have not yet been resolved and it remains unclear when and how they will be solved in the future. At the same time, the discussion quite often does not include necessary theoretical foundations for the different alternatives. In this article we try to develop a rigorous foundation for the concept of a regional reserve currency, to present theoretical arguments for the factors relating to the formation of reserve currencies and to estimate the potential of the Russian ruble as a regional reserve currency.

Keywords: global imbalances, international monetary system, reserve currencies, regional reserve currencies

JEL Classification: E41, E42, E58, F31, F33, F34, F36, F42, F55, G15