Abstract This paper introduces institutional legibility as a missing variable in the analysis of global liquidity and monetary power. Existing approaches explain international liquidity hierarchies primarily in terms of volume, balance-sheet capacity, or network effects. This paper argues instead that the decisive question is whether a state’s intervention is legible—that is, whether its triggers, constraints, and exit conditions are sufficiently readable for markets and institutions to model, price, and absorb. Using a triangular comparison of the United States, Japan, and China, the paper shows why similarly large interventions generate fundamentally different outcomes at the global settlement interface. The United States exhibits self-referential legibility within the dollar system; Japan operates as a case of “legible extremity,” sustaining extraordinary monetary expansion without destabilizing expectations; China, by contrast, relies on discretionary administrative liquidity that stabilizes domestically but remains externally illegible, producing friction, uncertainty premia, and exclusion at the global level. The paper operationalizes this argument through a simple diagnostic—the Legibility Test (trigger, constraint, exit)—and applies it to recent stress episodes. It demonstrates that institutional legibility plays a critical role in determining access to Federal Reserve dollar swap lines, the pricing of risk premia, and the distribution of financial support during crises. Swap lines emerge not merely as instruments of liquidity provision, but as institutional filters that reward legible intervention regimes and penalize opaque ones. An extended discussion of India introduces a third strategic path—interface sovereignty—showing how states without monetary dominance can engineer partial legibility through platform-based coordination. The paper concludes that contemporary monetary power is exercised less through the sheer scale of liquidity creation than through the architecture of legibility that governs who is integrated, who is priced, and who is excluded under stress.
Matthias Garscha (Sun,) studied this question.