The Deviation from CIP: Why We Need to Change the Way We Think About Currencies

Currencies are no longer just means of payment or stores of value. They are hierarchical funding structures with internal tensions made visible through the covered interest parity (CIP) basis.

Abstract

This article redefines the role of currencies within the global financial system, challenging the traditional view that sees them as relative prices or mere instruments of exchange. By analyzing the persistent deviation from Covered Interest Parity (CIP), it reveals how currencies actually function as hierarchical funding structures, articulated…