How the composition of central banks’ foreign currency reserves may be changing

Arnab Das and co-researchers explore the role of the USD as a store of value in foreign currency reserves and as a means of exchange for international trade.

May 20, 2019 | Arnab Das, Jennifer Johnson-Calari and Adam Kobor

In this white paper, the authors delve into the attributes of a reserve currency from a historical perspective and consider the forces at play in the 21st century. The paper considers these questions within a broader framework of what attributes are required of a country for its currency to be accepted as major reserve currency. And, at a more micro level, what are the policy considerations that drive the optimal currency composition at the level of an individual central bank.
 

Within this context, the paper assesses the role of the USD as a store of value in foreign currency reserves and as a means of exchange for international trade. The authors suggest reasons why its dominance in both arenas is likely to continue as well as assessing the nature and viability of current challenges to its dominance from major trading countries seeking greater political autonomy.
 

To find out more, click on “Download PDF”.
 

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