The Currency Composition of Foreign Exchange Reserves: Retrospect and Prospect

Author/Editor:

Barry J. Eichengreen ; Donald J Mathieson

Publication Date:

July 1, 2000

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the determinants of the currency composition of international reserves. Our single most important finding is the striking stability over time of the relationship between the demand for reserves denominated in different currencies and its principal determinants: trade flows, financial flows and currency pegs. This result contrasts sharply with recent predictions of sharp shifts in the currency composition of central banks’ holdings of foreign exchange. The message would seem to be that in this, as in other respects, the international monetary system is in a mode of gradual, continuous evolution, not of rapid, discontinuous change.

Series:

Working Paper No. 2000/131

Subject:

Banking Central banks Currencies Financial markets International capital markets International monetary system International reserves Money Reserve currencies

English

Publication Date:

July 1, 2000

ISBN/ISSN:

9781451855272/1018-5941

Stock No:

WPIEA1312000

Pages:

34

Please address any questions about this title to publications@imf.org