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For many observers, internationalization is the yuan's manifest destiny - an irresistible by-product of the remarkable economic success of the People's Republic of China (PRC). But is such confidence warranted? Recent history has seen the emergence of other currencies that were also expected, at least for a while, to attain wide, growing cross-border use. These included the deutsche mark (DM), the Japanese yen, and the euro (successor to the DM). Yet in the end their internationalization reached an upper limit, short of expectations. Will history repeat itself? Or will the yuan prove exceptional, the currency that finally managed to keep ascending where others faltered? The aim of this paper is to see what lessons may be drawn from these earlier experiences for the anticipated internationalization of the yuan. Much can be learned from their stories - first, about what may drive the internationalization of a currency, and second, about what may ultimately set a limit to the process. The main message of the analysis is that the challenge of internationalization is formidable, involving demanding conditions. Can Beijing sustain its record of price stability and effective policy management? Can the country succeed in shifting its industrial and trade structure toward exports of more advanced differentiated products? Can the yuan's convertibility be broadened? Can domestic financial markets be adequately developed? Can the country's political institutions be trusted? Can geopolitical tensions be avoided? Contrary to predictions of the yuan's "inevitable" rise, success in all these respects is by no means guaranteed.

"In this article the author addresses the question of the ontology of power and rule-setting in the international monetary system. By distinguishing between two dimensions of monetary power - autonomy and influence - he offers an innovative approach towards power in the international monetary system. Within this context he examines and analyses different developments, outlining a diffusion of power among states as well as between states and non-state actors rather in the dimension of autonomy than in the dimension of influence. The author introduces the concept of leaderless diffusion, meaning that leadership in the system has been more scattered than relocated. He argues that a power shift has taken place from few very powerful states towards a growing number of autonomous actors, especially when it comes to rule-setting abilities within the monetary system. Furthermore, he outlines that on the level of governance, a distinction should be made between the individual state and the global system and thus offers an elaborated approach towards understanding monetary and economic power in the 21st century." (author's abstract)

Are IPE journals becoming boring? The question is a serious one. Over the four decades or so since the modern field of International Political Economy was born, the character of what gets published in leading journals in the United States -- IPE standard setters like International Organization, International Studies Quarterly, and World Politics -- has changed dramatically. Arguably, the change has not been for the better. Adapted from the source document.

One of the most striking financial developments in recent years was the emergence of sovereign wealth funds (SWFs) – large publicly owned investment portfolios, which until recently were growing rapidly in both number and size. In a global environment already roiled by a prolonged credit crisis, SWFs raise tricky and potentially controversial new questions for international financial regulation. One issue of concern to many in host countries is the possibility that some SWFs might be used for overt or tacit political purposes, posing a challenge for global monetary governance: a Great Tradeoff between, on the one hand, the world community's collective interest in sustaining the openness of capital markets; and on the other hand, the legitimate national security concerns of individual host countries. Can some balance between the two be found that will be both stable and acceptable to all concerned? Individually as well as collectively, recipient countries have begun to address the regulatory challenge directly. To date, however, accomplishments have been slight and have failed to stem a noticeable drift toward financial protectionism. A review of some recent proposals suggests that there is no foolproof solution to the Great Tradeoff. But the potential for controversy could be significantly reduced by a negotiated agreement among host governments addressing three key issues: (1) definitions; (2) risk assessment; and (3) dispute resolution. The most logical venue for such an exercise would be the OECD, building on its already extensive experience with international investment issues.

AbstractAfter nearly a century of dominance of the international monetary system, has the US dollar finally met its match in the euro? When Europe's economic and monetary union (EMU) came into existence in 1999, many observers predicted that the euro would soon join America's greenback at the peak of global finance. Achievements, however, have fallen short of aspiration. After an initial spurt of enthusiasm, international use of the euro actually appears now to be levelling off, even stalling, and so far seems confined largely to a limited range of market sectors and regions. The euro has successfully attained a place second only to the greenback – but it remains, and is likely to remain, a quite distant second without a determined effort by EMU authorities to promote their money's global role. The temptation will surely be great. In practical terms, it is difficult to imagine that EMU authorities will refrain entirely from trying to promote a greater role for the euro. But that, in turn, could turn out to be a recipe for discord with the United States, which has never made any secret of its commitment to preserving the greenback's worldwide dominance. A struggle for monetary leadership could become a source of sustained tensions in US–European relations. Fortunately, however, there seems relatively little risk of a destabilizing escalation into outright geopolitical conflict.