Topic
Currency
About: Currency is a research topic. Over the lifetime, 26697 publications have been published within this topic receiving 485370 citations. The topic is also known as: monetary unit & unit of money.
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TL;DR: The authors examine the use of currency derivatives in order to differentiate among existing theories of hedging behavior and suggest that firms might use derivatives to reduce cash flow variation that might otherwise preclude firms from investing in valuable growth opportunities.
Abstract: We examine firms' use of currency derivatives in order to differentiate among existing theories of hedging behavior. Firms with greater growth opportunities and tighter financial constraints are more likely to use currency derivatives. This result suggests that firms might use derivatives to reduce cash flow variation that might otherwise preclude firms from investing in valuable growth opportunities. Firms with extensive foreign exchange-rate exposure and economies of scale in hedging activities are also more likely to use currency derivatives. Finally, the source of foreign exchange-rate exposure is an important factor in the choice among types of currency derivatives.
148 citations
TL;DR: For example, a European call option on a foreign currency is an option to buy one unit of the currency on a predetermined date at a predetermined exchange rate as mentioned in this paper, which can be defined in the same way as options on a stock.
Abstract: extended with its underlying assumptions being relaxed. The model has also found many applications in finance. Smith [6] provides a good overall review of the subject. Options on a foreign currency can be defined in the same way as options on a stock. For example, a European call option on a foreign currency is an option to buy one unit of the currency on a predetermined date at a predetermined exchange rate. At the time of writing there is no well-organized market for foreign currency options. However, the Philadelphia, Montreal and Vancouver stock exchanges have all submitted proposals for the creation of such a market.
147 citations
TL;DR: The authors surveys recent empirical evidence on the determinants of the currency composition of debt, and on the impact of exchange rate fluctuations on economic activity, and suggests that Latin American firms tend to partially match the composition of their debt with the currency compositions of their income stream but the liability dollarization can reduce or possibly reverse the typical Mundell-Fleming result of expansionary devaluations.
147 citations
TL;DR: The authors compare the conditional variance and the persistence of real exchange rate shocks within the German monetary union and between Germany and eight European countries to assess the viability of a monetary union in Europe.
Abstract: The renewed quest for a European monetary union raises the question: Is Europe ready for a common currency? We compare the conditional variance and the persistence of real exchange rate shocks within the German monetary union and between Germany and eight European countries to assess the viability of a monetary union in Europe. The results suggest a 'Europe of Two Speeds': A core union among Germany, her smaller neighbors and France would be viable today. Further reduction of real exchange rate variability is needed, in contrast, between these countries and Denmark, Italy, and the United Kingdom. Alternatively, monetary union should be postponed until further adjustment has occurred. Such a waiting period would neither require nor benefit much from further tightening of the current EMS. Copyright 1994 by MIT Press.
147 citations
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TL;DR: The extent to which the attributes of the anonymous users of Bitcoin can be inferred through their behavior is document, and it is found that users who engage in illegal activity are more likely to try to protect their financial privacy.
Abstract: This paper develops a model of user adoption and use of virtual currency (such as Bitcoin), and focusing on the dynamics of adoption in the presence of frictions arising from exchange rate uncertainty. The theoretical model can be used to analyze how market fundamentals determine the exchange rate of fiat currency to Bitcoin. Empirical evidence from Bitcoin prices and utilization provides mixed evidence about the ability of the model to explain prices. Further analysis of the history of all individual transactions on Bitcoin’s public ledger establishes patterns of adoption and utilization across user types, transaction type, and geography. We show that as of mid-2015, active usage was not growing quickly, and that investors and infrequent users held the majority of Bitcoins. We document the extent to which the attributes of the anonymous users of Bitcoin can be inferred through their behavior, and we find that users who engage in illegal activity are more likely to try to protect their financial privacy.
147 citations