Scientific Journal SPATIAL ECONOMICS - Prospects for Creating a Reserve Currency by the Shanghai Cooperation Organization Countries

In the section	Articles
Title of the article	Prospects for Creating a Reserve Currency by the Shanghai Cooperation Organization Countries
Pages	128-153
Author	Igor Sergeevich Ivanchenko Professor at Department of Statistics, Econometrics and Risk Assessment, Faculty of Accounting and Economics Rostov State University of Economics 69 Bolshaya Sadovaya St., Rostov-on-Don, 344002, Russian Federation This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0002-9268-2103
Abstract	The purpose of this study is to clarify the prospects for the creation of a new reserve currency by the (Shanghai Cooperation Organization (SCO) countries to reduce foreign exchange costs in trade transactions, to strengthen integration processes in the Eurasian space, to increase the investment potential of developing Asian countries and to stimulate sustainable economic growth. The paper presents the results of mathematical modeling of the optimal portfolio structure of collateral assets with the possible issuance of a new reserve currency by the SCO countries. The article concludes that currently the best reserve assets that have been analyzed are the Chinese yuan, Indian rupee and gold. The expected return of the new reserve currency does not depend on fluctuations in the global foreign exchange market, and its calculated risk (standard deviation of return) turned out to be lower than the risk of fluctuations in the value of the yuan and gold. The article concludes that gold is the best collateral asset, as it has a stable positive yield, constant purchasing power and a fair value that is 4 times higher than the market value. It is proposed to issue a new reserve currency in the form of stablecoins so that it incorporates all the best properties of cryptocurrencies and fiat money
Code	336.744
JEL	C51, E47, E51
DOI	https://dx.doi.org/10.14530/se.2024.3.128-153
Keywords	Economic development, gold standard, Markowitz model, non-inflationary issue, fair value, Shanghai Cooperative Organization (SCO)
Download	SE.2024.3.128-153.Ivanchenko.pdf
For citation	Ivanchenko I.S. Prospects for Creating a Reserve Currency by the Shanghai Cooperation Organization Countries. Prostranstvennaya Ekonomika = Spatial Economics, 2024, vol. 20, no. 3, pp. 128–153. https://dx.doi.org/10.14530/se.2024.3.128-153 (In Russian)
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Financing	The study was supported by Russian Science Foundation under scientific project No. 2328-00931, https://rscf.ru/project/23-28-00931/, ‘Inflation-free economic growth of the Russian economy: opportunities and ways to achieve in the conditions of sanctions’
Submitted	09.03.2024
Approved after reviewing	18.08.2024
Accepted for publication	25.08.2024
Available online	04.10.2024