ABSTRACT
This chapter refers to the econometric results where they apply to the variables under discussion. It demonstrates that it is account surpluses which enable the key currency to build its international investment position. In addition to the political criteria, a country must fulfill certain economic requirements to achieve and maintain key currency status. The external financial position of a country is the immediate determinant of foreign perceptions of the outlook for stability of its currency. A country's external position has distinct but closely related features: its liquidity ratios, which compare its quick assets and its quick liabilities; and the structure of its balance of payments, which determines whether its overall international investment position will rise or fall. The views of individual countries could also shift over time with changes in political power relationships and in such economic variables as the degree of world inflation or deflation inducing them to shift from one area to the other.
