Naoyuki Yoshino: There was a discussion on the possibility of a yen bloc in the early 1990s. Frankel and Wei suggested that the U.S. dollar had a dominant influence in the western hemisphere and the Deutsch mark similarly dominated in Europe. On the other hand, East Asian countries were more properly classified as a dollar bloc than a yen bloc.
This paper provides empirical evidence on whether East Asia can be considered a RMB bloc. The paper focuses on measuring empirical evidence in exchange rate determination. Many papers use the Swiss franc as a numeraire currency. Here, however, the authors found that the New Zealand dollar leads to a more stable coefficient compared with the Swiss franc. Empirical results are based on two-step regressions to avoid multicollinearity with time-varying coefficients and suggest that the RMB gained influence in exchange rate determination in East Asia, especially since the 2008–09 Global Financial...