., and y. forouheshfar ( 2015 ), “ the impact of yuan internationalization on the stability of the international monetary system ”, journal of international money and finance, 57, pp. 115 – 135. bergsten, f. ( 1997 ), “ the dollar and the euro, ” foreign affairs 76, pp. 83 – 95. chitu, l., b. eichengreen and a. mehl ( 2014 ), “ when did the dollar overtake sterling as the leading international currency? evidence from the bond markets ”, journal of development economics 111, pp. 225 – 245. cœure, b. ( 2014 ), “ taking stock of the global role of the renminbi ”, speech by mr benoit cœure, member of the executive board of the european central bank, at the europeanchinese banking day, frankfurt am main, 17 november 2014. cohen, b. ( 1971 ), the future of sterling as an international currency, london : macmillan. devereux, m. and s. shi ( 2013 ), “ vehicle currency ”, international economic review 54, pp. 97 – 133. eichengreen, b. ( 2010 ), “ a world of multiple reserve currencies ”, project syndicate, 20 october 2010. eichengreen, b. ( 2014 ), “ international currencies past, present and future : two views from economic history ”, bank of korea wp 2014 – 31. eichengreen, b., l. chitu and a. mehl, “ stability or upheaval? the currency composition of international reserves in the long run ”, imf economic review, forthcoming ( a ). the ecb ’ s annual reports on the international role of the euro released in july 2013 and july 2014 showed that the euro area sovereign debt crisis had weighed on the international use of the euro, which declined in 2011 – 2012 due to the fragmentation of the euro area financial system that affected euro area capital markets ’ depth and liquidity. after policy measures were taken at both the european and the national level to reduce the degree of financial fragmentation, there were signs of a turnaround in the international use of the euro in 2013. bis central bankers ’ speeches eichengreen, b., l. chitu and a. mehl, “ network effects, homogeneous goods, and international currency choice : new evidence on oil markets from an earlier era

of international bonds denominated in euro, whose proceeds are swapped back into dollars. in april 2015 mexico became the first sovereign state to issue a bond denominated in euro with a maturity of 100 years. 14 moreover, the share of the euro as an invoicing or settlement currency for extra - euro area trade remained broadly stable again last year. finally, the euro is used as a reference currency for the anchoring of exchange rates, mainly in countries neighbouring the euro area and countries that have established special institutional arrangements with the eu or its member states. 15 iii. welfare implications those are the recent developments. but to what extent do they matter? what are the implications of international currency status? in other words, what are the benefits and costs? one starting point here is the striking diversity of policy positions towards currency internationalisation across countries and over time. in the 1970s, germany and japan maintained tight controls and regulatory restrictions to limit foreign holdings of their still now, capital controls in place in some emerging markets are believed to help explain the development of offshore markets in their currencies, as well as of certain financial derivative instruments, such as nondeliverable forward exchange rates. similar evidence is presented in bis ( 2015 ). with the exception of the countries participating in erm ii, the decision to use the euro as an anchor currency is a unilateral one and does not involve any commitment on the part of the ecb. the us dollar, on the other hand, continues to be widely used as an exchange rate anchor both in asia and in central and south america. bis central bankers ’ speeches currencies. 16 in contrast, the united states has always been open to the international use of the dollar. china is now promoting the global role of the renminbi, an objective which it also uses as an anchor for domestic reforms. 17 and the ecb ’ s position is one of neutrality. we view the international role of the euro as being primarily determined by market forces and we neither hinder nor promote it. one reason for such diverse approaches is that the benefits and costs of international currency status differ from country to country and are difficult to measure. 18 take the benefits first. one benefit is seigniorage, i. e. interest - free loans to the issuing central bank from non - residents who hold the international currency. in the current environment of low interest rates, this benefit is arguably very limited. but international currency status also creates efficiency gains in financial