## The Currency Composition of Foreign Exchange Reserves: Retrospect and Prospect

_IMF Working Papers, July 1, 2000_

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## Bibliographic details
- Authors: Barry J. Eichengreen, Donald J Mathieson
- Published: July 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451855272.001

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### Summary and central conclusion
- The paper examines the determinants of the currency composition of international reserves.
- Single most important finding: 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 stability contrasts sharply with recent predictions of sharp shifts in the currency composition of central banks’ holdings of foreign exchange.
- Interpretive message: the international monetary system is in a mode of gradual, continuous evolution, not of rapid, discontinuous change.

### Determinants analyzed
- Trade flows
- Financial flows
- Currency pegs

### Key findings and implications
- Stability: The relationship between currency-denominated reserve demand and the principal determinants has exhibited striking stability over time.
- Contrast with forecasts: Recent predictions of sharp shifts in reserve currency composition are not supported by the observed stability.
- Policy implication: Expect gradual, continuous evolution in the international monetary system rather than rapid, discontinuous change.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-currency-composition-of-foreign-exchange-reserves-retrospect-and-prospect-3693_