## Reserve Currency Blocs: A Changing International Monetary System?

_IMF Working Papers, January 24, 2018_

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## Bibliographic details
- Authors: Camilo E Tovar Mora, Tania Mohd Nor
- Published: January 24, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484338704.001

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### Research questions and approach
- What is the extent of currency diversification in the international monetary system? How has it evolved over time?
- Quantification approach:
  - Use regression methods of currency co-movements to determine the extent to which national currencies across the world belong to a reserve currency bloc.
  - Use these estimates to calculate the economic size of each currency bloc.
- Key contribution: quantification of the size of the Chinese renminbi (RMB) bloc.

### Major findings
- The international monetary system has transitioned from a bi-polar system (U.S. dollar and the euro) to a tri-polar one that includes the renminbi.
- Estimated global GDP shares by currency bloc:
  - U.S. dollar bloc: 40 percent
  - Renminbi (RMB) bloc: 30 percent
  - Euro bloc: 20 percent
- Geographic and currency-specific observations:
  - The geographical area of influence for the RMB bloc appears to be most evident among the BRICS’ currencies.
  - The British pound and the Japanese yen blocs appear to play minor roles.

### Implications and interpretation
- The continued dominance of the dollar bloc (40 percent of global GDP) suggests persistence of dollar-centric dynamics in the international monetary system despite growing RMB influence.
- Emergence of a sizeable RMB bloc (30 percent of global GDP) indicates meaningful progress in RMB internationalization and regional influence, particularly among BRICS economies.
- The euro bloc’s estimated share (20 percent of global GDP) reflects its continued importance but secondary role relative to the dollar and RMB blocs.
- Minor roles for the pound and yen blocs imply limited global reserve-currency contagion or bloc membership associated with those currencies.

*Source: IMF Working Paper — "Reserve Currency Blocs: A Changing International Monetary System?" by Camilo E Tovar Mora and Tania Mohd Nor (January 24, 2018).*

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- **Reserve Currency Blocs: A Changing International Monetary System?, WP/18/20, January 2018**
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_Source: https://www.imf.org/en/publications/wp/issues/2018/01/25/reserve-currency-blocs-a-changing-international-monetary-system-45586_