The share of US dollar reserves held by central banks fell to 59% – its lowest level in 25 years – during the fourth quarter of 2020, according to a recent survey by the International Monetary Fund (IMF).
The results of the IMF’s Survey of the Currency Composition of Official Foreign Exchange Reserves (COFER) indicate that this partly reflects the declining role of the US dollar in the global economy in the face of competition from other currencies used by banks. central offices for international transactions.
If the changes in central bank reserves are large enough, they can affect the currency and bond markets, said Serkan Arslanalp, deputy division chief in the balance of payments division of the IMF’s statistics department, and l economist Chima Simpson-Bell.
The share of US dollar assets in central bank reserves has fallen 12 percentage points – from 71 to 59 percent – since the euro was launched in 1999, they said in a blog post on the IMF website.
Meanwhile, the euro’s share has fluctuated around 20 percent while the share of other currencies, including the Australian dollar, Canadian dollar and Chinese renminbi, climbed to 9 percent in the fourth quarter.
However, the fact that the value of the US dollar has remained broadly unchanged while its share in global reserves has declined indicates that central banks have indeed gradually moved away.
Some expect the US dollar’s share of global reserves to continue to decline as central banks in emerging countries and developing economies seek to further diversify the currency composition of their reserves. A few countries like Russia have already announced their intention to do so.
Despite major structural changes in the international monetary system over the past six decades, the US dollar remains the dominant international reserve currency. Any change in his status is likely to appear in the long term.
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