The euro as invoicing currency in international trade

Arbeitspapier

This paper investigates the determinants of currency invoicing in international trade. Although the currency of invoicing is central for the transmission of monetary policy, empirical research on this topic is scarce due to a lack of data. With a new extensive invoicing dataset and a panel model analysis this paper shows that a country’s membership or prospective membership of the EU plays a decisive role in the choice of the euro as invoicing currency. The role of the euro as vehicle currency is increasing but still limited when compared to the U.S. dollar. Monetary instability and low product differentiation favour vehicle pricing in U.S. dollar. An increase of euro invoicing due to higher exchange rate volatility supports the role of the euro as vehicle currency, however. High market power defined as the share of a country’s total exports to world exports and membership of the euro area make invoicing in the home currency (euro) more likely.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 665

Classification and Topics

• Classification: Wirtschaft ; Open Economy Macroeconomics ; International Policy Coordination and Transmission ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Subject: Currency Invoicing ; international trade ; panel data ; Euro ; Internationaler Zahlungsverkehr ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kamps, Annette
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/153099
• Last update: 10.03.2025, 11:45 AM CET