Subject. The article discusses currency crises as a form of manifestation of the crisis-proneness of the global economy and the world monetary system. Objectives. The purpose is to develop a new theory to explain the mechanism of currency crises, and on its basis to create a mathematical model as an alternative to the models of currency crises of three generations. Methods. The study draws on methods of economic abstraction and generalization, formalization and idealization, analysis and synthesis, economic and mathematical modeling. The empirical material is based on data from the Bank for International Settlements processed under statistical and graphical methods. The new concept of currency crises rests on theoretical and methodological tools of exchange rate theories. Results. I analyzed the nominal exchange rate dynamics in 144 countries from 1958 to 2024 and confirmed the currency crisis-proneness of the modern global economy. I compared and generalized models of currency crises of three generations, analyzed their main disadvantages, offered my own theory of currency overhang, on which basis I considered various currency imbalances, formulated the effect of persistent ac cumulation and the hypothesis of impossibility. Furthermore, I developed a mathematical model to determine the size of currency overhang and predict currency crisis. Conclusions. Currency overhang is manifested in extreme and crisis-prone economic circumstances, the speed of its manifestation depends on the degree of market flexibility (restrictiveness) of the exchange rate formation mechanism. The greater the size of currency overhang, the greater the likelihood of a currency crisis and its severity.
Keywords: crisis risk, exchange rate, currency crisis, monetary system
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