Reserve Currencies in an Evolving International Monetary System

By Alina Iancu, Gareth Anderson, Sakai Ando, Ethan Boswell, Andrea Gamba, Shushanik Hakobyan, Lusine Lusinyan, Neil Meads, Yiqun Wu

November 17, 2020

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Alina Iancu, Gareth Anderson, Sakai Ando, Ethan Boswell, Andrea Gamba, Shushanik Hakobyan, Lusine Lusinyan, Neil Meads, and Yiqun Wu. Reserve Currencies in an Evolving International Monetary System, (USA: International Monetary Fund, 2020) accessed November 8, 2024

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Despite major structural shifts in the international monetary system over the past six decades, the US dollar remains the dominant international reserve currency. Using a newly compiled database of individual economies’ reserve holdings by currency, this departmental paper finds that financial links have been an increasingly important driver of reserve currency configurations since the global financial crisis, particularly for emerging market and developing economies. The paper also finds a rise in inertial effects, implying that the US dollar dominance is likely to endure. But historical precedents of sudden changes suggest that new developments, such as the emergence of digital currencies and new payments ecosystems, could accelerate the transition to a new landscape of reserve currencies.

Subject: Central Banks, Money, Technology

Keywords: Currencies, Currency composition, Currency composition of reserves, Currency denomination, Currency holding, Digital currencies, DP, DPPP, Foreign exchange reserves, Global, International currency, International debt and cross-border bank claims, International reserves, Invoicing currency, Reserve assets, Reserve currencies, Reserve currency share, Transfer service

Publication Details

Pages:

67
Volume:

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DOI:

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Issue:

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Series:

Departmental Paper No 2020/002
Stock No:

RCEIMSEA
ISBN:

9781513560298
ISSN:

2616-5333

Notes

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