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UTF-8 - en - (Studies in Business and Economics) The Official Use of International Currencies - Assessments and Implications
UTF-8 - en - (Studies in Business and Economics) The Official Use of International Currencies - Assessments and Implications
UTF-8 - en - (Studies in Business and Economics) The Official Use of International Currencies - Assessments and Implications
10(3)/2015
DOI 10.1515/sbe-2015-0037
Abstract:
The paper analyses the official use of international currencies as reserve currency
(store of value) and anchor currency (unit of account). Examining the role as a reserve currency
we note that the US dollar is the main reserve currency even if it recorded a decline given the
decrease of the value of the US dollar reserve holdings and the gradual diversification of the
currencies used. Since 2010, the euro's share decreased continuously may be due to the
Eurozone crisis and the euro's depreciation against the US dollar. Then we show that the US
dollar dominates as an anchor currency, though it was temporary abandoned during crisis time,
having more than a regional dimension. At the same time, the use of the euro in exchange rate
arrangements appears mainly in the regions that have close links with the euro area. Over the
last few years, we have witnessed a gentle orientation towards a multimonetary world, especially
regarding the use of the international currencies as reserve currency given the diversification of
the currencies in which central banks understand to hold international reserves and the
increasing share of the nontraditional currencies in total foreign exchange reserves.
1. Introduction
The official use of international currencies is analyzed as reserve currency and
anchor currency, considering the general functions of an international currency as
store of value and unit of account respectively.
2. International currencies as reserve currencies
From a value of USD 93.1 billion in 1970 (78.5% of developed countries and
21.5% of developing countries), total international reserves (including gold) increased
significantly to USD 6.9 trillion in 2007, USD 10.7 trillion in 2011 and USD 13.1 trillion
in 2014 (at constant prices and exchange rates). This grew in reserves was fueled by
net inflows of private capital. In particular in response to `90s crises, developing
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Table 1. Top of the countries with the largest international reserves (including
gold) in 2007-2014
Country
China
Japan
Saudi Arabia
Switzerland
USA
Russian
Federation
Brazil
Korea
Hong Kong
India
2007
1546.3
973.3
309.3
75.2
277.5
478.8
180.3
262.5
152.7
276.6
238.5
270.4
255.8
284.7
288.6
292.1
268.7
300.5
352.0
306.9
285.4
298.7
373.2
327.7
317.4
300.4
358.8
345.7
311.2
298.1
2014
3900.0
1260.7
744.4
545.8
434.4
386.2
363.6
362.8
328.5
325.1
Place
`14
`07
1
1
2
2
3
4
4
10
5
5
6
3
7
8
9
10
8
7
9
6
84.5
66.0
56.4
GBP
64
48
5.9
2.2
3.4
FRF
16
31
1.2
0.8
1.8
DEM
15
15
6.7
13.4
13.7
JPY
7.0
7.1
Others
1.7
10.6
17.6
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Chart 1. The share of currencies in total foreign exchange reserves in 1990-2014 (% of total allocated reserves)
80
70
60
50
40
30
20
10
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2002
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5. References
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the
International
Monetary
System.
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