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Journal of the Japanese and International Economies

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Trade invoicing, Invoicing currency, International currency, RMB internationalization


In this paper, we investigate how much a major currency is used for trade invoicing by focusing primarily on the experiences of the U.S. dollar, the Japanese yen, and the Deutsche mark (DM) in the 1970s through the 1990s. We then attempt to draw lessons for China’s renminbi (RMB) internationalization. Our data on the shares of the three major currencies in export invoicing show that the dollar was unequivocally a global invoicing currency, and that the DM was the most important regional currency in Europe while the yen was never a global or a regional currency. DM invoicing was driven by European countries’ trade ties with Germany. In contrast, the yen was not widely used for trade invoicing by Asia-Oceania countries despite the latter’s strong trade ties with Japan. Our regression analysis on the determinants of the major currency share in trade invoicing (also including UK pound sterling, the French franc, the Italian lira, and the Swiss franc) in the 1970-1998 period shows that the invoicing share of a major currency tended to be positively affected by the degree of other economies’ trade ties with the major currency country and negatively affected by the degree of their financial development or openness. Also, the major currency share in trade invoicing was affected by both other economies' assigned weights of the major currency in their implicit currency baskets and these economies’ trade shares with major-currency zone countries. Economies belonging to the U.S. dollar (or DM) zone tended to invoice their trade more in the dollar (or DM) and less in the DM (or dollar). The use of yen for trade invoicing was not much affected by these factors. European countries largely belonged to the DM zone and tended to use the DM for trade invoicing, whereas Asia-Oceania countries belonged mainly to the U.S. dollar zone, leading to a high degree of dollar use. We also find that major currency countries tended to invoice their trade in their own currencies when they had a large presence in international trade, high levels of per capita income, and financial markets that were developed and open. For China, its low level of per capita income, limited financial openness, and the presence of U.S. dollar zone countries in Asia stand as a challenge to the nation’s ambition to promote the RMB as a major trade-invoicing currency.


Authors' version of a paper that was subsequently published in Journal of the Japanese and International Economies, Volume 42, December 2016, Pages 123–145. Available at



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