Comparison of Factors Affecting the Internationalization Level of SDR Basket Currencies

This research uses the panel entropy weight method to construct the Currency Internationalization Index (CII) to measure the internationalization level of the US dollar, euro, pound, yen, and RMB in the special drawing right (SDR) basket currencies. A systematic generalized method of moments (GMM) model with a variable considering the epidemic’s influence was used to analyze the influencing factors of currency internationalization. The results showed that the monetary network externalities, economic strength of sovereign countries or regions, and financial market factors significantly and positively affected currency internationalization. The currency instability and the epidemic had negative influences on currency internationalization. A heterogeneity test showed that these factors had different effects on the internationalization levels of different sovereign currencies.