How the US Dollar Becomes an International Currency?

The US dollar is not like any other national or regional currency; it is also an international one. More precisely, it becomes an international currency each time it is transferred by a US resident to a non-resident.

This paper analyses all the transactions that are summarized in the US balance of payments, which is presented as the balance sheet of a bank that creates money. It also contrasts these money-creation mechanisms with the conventional intermediation mechanisms. The analysis is then carried to the level of stocks that appear in the International Investment Position of the United States. Finally, this paper presents the evolution of the flows and stocks of the creation of the US international currency, notably in the context of the effects of the 2008-2009 financial crisis.