Chapter

Appendix I. International reserves

Author(s):
International Monetary Fund
Published Date:
November 2005
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Total international reserves, including gold, increased by 15 percent during 2004 and stood at SDR 2.7 trillion at the end of the year (Table I.1). Foreign exchange reserves, which constitute the largest component of official reserve holdings, grew by 18 percent, to SDR 2.4 trillion. IMF-related assets, which make up the rest of nongold reserves, declined by 12 percent to SDR 76 billion, reflecting the recent decline in outstanding credit to member countries. The market value of gold held by monetary authorities decreased by 1 percent to SDR 254 billion in 2004.1

Table I.1Official holdings of reserve assets1(In billions of SDRs)
199920002001200220032004March 2005
All countries
Total reserves excluding gold
Fund-related assets
Reserve positions in the Fund54.847.456.966.166.555.850.7
SDRs18.518.519.619.719.920.320.2
Subtotal, IMF-related assets73.265.976.485.786.476.170.9
Foreign exchange1,299.61,490.21,633.11,771.02,037.52,407.22,538.4
Total reserves excluding gold1,372.81,556.11,709.51,856.72,123.92,483.32,609.3
Gold2
Quantity (millions of ounces)967.1952.1942.8930.6913.1900.2894.1
Value at London market price204.5200.6207.4234.6256.4253.9253.0
Total reserves including gold1,577.31,756.61,916.92,091.32,380.32,737.22,862.3
Industrial countries
Total reserves excluding gold
Fund-related assets
Reserve positions in the Fund46.839.747.053.752.643.638.9
SDRs14.714.416.015.815.315.314.1
Subtotal, IMF-related assets61.554.162.969.567.958.953.0
Foreign exchange528.7602.0626.8661.5752.3845.4860.3
Total reserves excluding gold590.2656.1689.7731.0820.2904.3913.3
Gold2
Quantity (millions of ounces)810.4796.5783.5769.8754.3740.6735.3
Value at London market price171.4167.8172.4194.1211.8208.9208.1
Total reserves including gold761.6823.9862.1925.11,032.01,113.21,121.3
Developing countries
Total reserves excluding gold
Fund-related assets
Reserve positions in the Fund8.07.79.912.313.912.211.7
SDRs3.74.13.63.94.65.06.1
Subtotal, IMF-related assets11.711.813.516.218.517.217.9
Foreign exchange770.9888.21,006.31,109.51,285.21,561.81,678.1
Total reserves excluding gold782.6899.91,019.81,125.71,303.71,579.01,696.0
Gold2
Quantity (millions of ounces)156.6155.6159.2160.7158.8159.6158.8
Value at London market price33.132.835.040.544.645.044.9
Total reserves including gold815.8932.71,054.81,166.21,348.31,624.11,740.9
Net debtor developing countries
Total reserves excluding gold
Fund-related assets
Reserve positions in the Fund5.65.46.48.09.28.58.1
SDRs3.13.32.72.93.63.95.0
Subtotal, IMF-related assets8.78.79.111.012.712.313.1
Foreign exchange608.6704.7805.6888.41,039.41,280.01,393.5
Total reserves excluding gold617.3713.4814.7899.41,052.21,292.31,406.6
Gold2
Quantity (millions of ounces)130.6129.6133.2135.0133.4134.3133.4
Value at London market price27.627.329.334.037.537.937.8
Total reserves including gold644.9740.7844.0933.41,089.61,330.21,444.4
Net debtor developing countries without debt-servicing problems
Total reserves excluding gold
Fund-related assets
Reserve positions in the Fund4.84.65.77.38.37.57.1
SDRs2.42.12.11.92.22.22.3
Subtotal, IMF-related assets7.26.77.79.210.59.79.4
Foreign exchange488.6570.6663.5751.9884.11,101.61,196.6
Total reserves excluding gold495.8577.2671.2761.2894.61,111.31,206.1
Gold2
Quantity (millions of ounces)85.484.688.389.988.288.488.4
Value at London market price18.117.819.422.724.824.925.0
Total reserves including gold513.9595.1690.6783.8919.41,136.21,231.1
Source: International Monetary Fund, International Financial Statistics.Note: Components may not sum to totals because of rounding.

Foreign exchange reserves

Foreign exchange reserves comprised 97 percent of nongold assets at the end of 2004. Developing countries held 65 percent of all foreign exchange reserves (SDR 1.6 trillion) at the end of 2004, increasing their holdings by 22 percent. During 2004, foreign exchange holdings of industrial countries rose by 12 percent to SDR 845 billion.

In 2004, the foreign exchange assets of the oil-exporting developing countries, which amount to 8 percent of all developing countries’ foreign exchange reserves, increased by 18 percent to SDR 133 billion. Foreign exchange reserves of the net creditor developing country group rose by 15 percent, to SDR 282 billion, and those of net debtor countries grew by 23 percent to SDR 1.3 trillion. Foreign exchange reserves of net debtors without debt-servicing problems increased by 25 percent to SDR 1.1 trillion, while those of countries with debt-servicing problems increased by 15 percent to SDR 178 billion.

Holdings of IMF-related assets

During 2004, total IMF-related assets (that is, reserve positions in the IMF and SDRs) declined by 12 percent, following three years of increase. Members’ reserve positions in the IMF—which consist of members’ reserve tranche and creditor positions—declined by 16 percent to SDR 56 billion, while the SDR holdings of IMF members remained at SDR 20 billion. The decline in the reserve positions was attributed mostly to industrial countries, which account for more than three-fourths of the reserve positions and SDR holdings.

Gold reserves

The market value of gold reserves declined by 1 percent to SDR 254 billion in 2004, reflecting a 1 percent decline in the physical stock of official gold. The share of gold in officially held reserves declined gradually to 9 percent by the end of 2004, whereas in the early 1980s gold represented about half of all officially held reserves. Most of the gold reserves (82 percent) are held by industrial countries: gold constituted 19 percent of these countries’ total reserves at the end of 2004. Gold reserves accounted for 3 percent of the total reserves of the developing countries.

Developments during the first quarter of 2005

During the first quarter of 2005, total reserve assets rose by SDR 125 billion and foreign exchange reserves by SDR 131 billion. Reflecting the decline in the physical stock of gold since the end of 2004, the market value of gold reserves decreased by nearly SDR 1 billion, and holdings of IMF-related assets declined by SDR 5 billion.

Currency composition of foreign exchange reserves

The currency composition of foreign exchange reserves has changed gradually over the past decade, with the share of U.S. dollar holdings in foreign exchange reserves rising from 59 percent in 1995 to 71 percent in 1999, and remaining broadly stable in 2000 and 2001 (Table I.2).2 In 2002, however, the share of U.S. dollar holdings sharply declined to 67 percent, driven by the fall in the value of U.S. dollar holdings and a reduced share of U.S. dollar assets in net purchases of reserves (Table I.3). Over the subsequent two years, the dollar share remained at a similar level. While the official reserves held in U.S. dollars picked up strongly over these two years—accounting for more than 80 percent of the quantity increase in official reserve holdings—this was offset by the weakening of the U.S. dollar vis-à-vis other major currencies (see the last paragraph for details).

Table I.2Share of national currencies in total identified official holdings of foreign exchange, end of year1(In percent)
1995199619971998199920002001200220032004
All countries
U.S. dollar59.062.165.269.471.070.570.766.565.865.9
Japanese yen6.86.75.86.26.46.35.24.54.13.9
Pound sterling2.12.72.62.72.92.82.72.92.63.3
Swiss franc0.30.30.30.30.20.30.30.40.20.2
Euro217.918.819.824.225.324.9
Deutsche mark15.814.714.513.8
French franc2.41.81.41.6
Netherlands guilder0.30.20.40.3
ECUs38.57.16.01.2
Other currencies44.84.33.84.51.61.41.21.41.91.8
Industrial countries
U.S.dollar52.357.459.167.673.572.572.768.970.571.5
Japanese yen6.75.75.96.96.76.55.64.43.83.6
Pound sterling2.12.12.02.12.22.01.92.11.51.9
Swiss franc0.10.10.10.20.10.20.30.60.20.1
Euro216.117.118.022.422.120.9
Deutsche mark16.615.916.213.4
French franc2.31.70.91.2
Netherlands guilder0.20.20.20.2
ECUs313.612.311.22.3
Other currencies46.04.74.46.21.41.61.51.71.92.0
Developing countries
U.S.dollar70.368.572.471.268.268.268.664.060.759.9
Japanese yen7.08.15.75.66.06.04.94.74.44.3
Pound sterling2.23.53.33.33.73.63.63.83.94.8
Swiss franc0.70.60.60.50.40.30.30.20.20.2
Euro19.920.621.826.128.929.2
Deutsche mark14.413.012.514.3
French franc2.42.02.12.1
Netherlands guilder0.50.30.50.4
ECUs30.00.00.00.0
Other currencies42.63.93.02.71.71.30.91.21.91.6
Memorandum items:
Unallocated reserves5
All countries25.621.821.322.122.923.626.028.329.832.6
Industrial countries1.02.22.11.11.10.30.30.30.20.3
Developing countries47.638.636.136.537.839.442.145.047.250.2
Note: Components may not sum to totals because of rounding. Country coverage changes marginally every year, but the changes were larger than usual in 1996 (broader coverage) and in 2000 (narrower coverage). The data for 2004 are preliminary.
Table I.3Currency composition of official holdings of foreign exchange, end of year1(In millions of SDRs)
199619971998199920002001200220032004
U.S. dollar
Change in holdings117,98785,75316,85480,42190,64351,512–8,78795,901128,324
Quantity change102,73949,03543,12964,55151,20921,93158,270176,862176,149
Price change15,24836,718–26,27515,87039,43429,581–67,057–80,960–47,826
Year-end value528,578614,331631,185711,606802,249853,761844,975940,8761,069,200
Japanese yen
Change in holdings10,101–2,7742,3737,1287,433–8,214–5,6341,4094,936
Quantity change15,076171–1,947–1,54712,105–1,474–6,5181356,014
Price change–4,976–2,9454,3198,675–4,672–6,7408841,274–1,078
Year-end value57,23954,46556,83863,96671,39963,18657,55258,96163,896
Pound sterling
Change in holdings8,1521,484–1034,7642,5181,1774,32849015,566
Quantity change5,5725498514,8613,3509413,3793614,088
Price change2,580934–954–97–8322369494551,478
Year-end value22,86824,35124,24829,01331,53132,70837,03637,52653,092
Swiss franc
Change in holdings246710–278–7005895461,868–2,281–571
Quantity change662743–313–3885045101,372–2,376–685
Price change–416–3335–313853649695114
Year-end value2,5773,2873,0092,3082,8983,4435,3113,0302,459
Euro
Change in holdings44,303234,02525,75467,51254,78042,091
Quantity change64,81737,79729,47841,40921,89429,314
Price change–20,514–3,772–3,72326,10332,88712,777
Year-end value179,924213,949239,703307,215361,995404,086
Deutsche mark
Change in holdings15,40511,512–10,958
Quantity change21,25521,123–14,619
Price change–5,849–9,6123,661
Year-end value125,119136,631125,673
French franc
Change in holdings–645–2,1701,209
Quantity change–112–1,082881
Price change–533–1,088327
Year-end value15,74313,57414,782
Netherlands guilder
Change in holdings–1831,265–828
Quantity change–621,447–944
Price change–121–182115
Year-end value2,0413,3062,478
European currency unit
Change in holdings984–3,242–46,110
Quantity change1,833512–47,582
Price change–849–3,7541,472
Year-end value60,24257,00010,890
Sum of the above3
Change in holdings152,04992,538–37,841135,915135,20970,77559,287150,300190,345
Quantity change146,96472,499–20,542132,294104,96551,38697,912196,550224,880
Price change5,08520,039–17,3003,62130,24419,390–38,625–46,250–34,535
Year-end value814,407906,945869,104986,8171,122,0261,192,8011,252,0881,402,3881,592,733
Other currencies
Change in holdings3,753–1,4985,275–25,014663–1,5203,1528,9551,977
Year-end value36,97735,48040,75415,74016,40314,88318,03626,99128,968
Total official holdings4
Change in holdings154,271108,683–30,339132,087190,623142,863137,928266,493369,751
Year-end value1,089,1421,197,8251,167,4861,299,5731,490,1971,633,0601,770,9882,037,4812,407,232
Note: Components may not sum to total because of rounding. Country coverage changes marginally every year, but the changes were larger than usual in 1996 (broader coverage) and in 2000 (narrower coverage). The data for 2004 are preliminary.

The euro, which replaced 11 European currencies and the European currency unit (ECU) on January 1,1999, accounted for 25 percent of total foreign exchange reserves in 2003 and 2004, higher than its average in preceding years. Given that, at the introduction of the euro, the euro system’s reserves previously denominated in euro-legacy currencies3 became domestic assets of the euro area, the share of the euro in 1999–2004 is not directly comparable with the previous years’ combined share of the four euro-legacy currencies identified in Table I.2: deutsche mark, French franc, Netherlands guilder, and private ECU.

The share of the Japanese yen in total foreign exchange reserves declined from 7 percent at end-1995 to 4 percent at the end of 2004. During the past decade, the share of pound sterling has been in the 2–3 percent range, while that of the Swiss franc has remained below 1 percent. The share of other currencies, which comprise currencies not identified in Table I.2, has been less than 2 percent since 1999. The share of unallocated reserves, for which no information on currency composition is available, rose to more than 30 percent of global reserves in 2004.

Changes in Table I.2

Table I.2 in this year’s report reflects changes in the underlying database on the Composition of Official Foreign Exchange Reserves (COFER). The most important changes include a significant curtailment of the use of estimation techniques when the currency composition of reserves is not reported, and a split of “Unspecified currencies” into two new categories, “Other currencies” and “Unallocated reserves,” in order to distinguish the reservesheld in currencies other than the major ones from the reserves whose currency composition has not been identified.

Data estimation and classification

This year’s data were compiled under a new rule that the estimation of the currency composition of reserves be limited to data gaps of less than four quarters. As a result, the aggregate currency composition is now calculated almost exclusively on the basis of reserves data reported by the authorities to COFER. Reserves held by nonreporting developing countries, for which the currency composition was previously estimated, have been moved to the new category “Unallocated reserves.”

In previous years, the “Unspecified currencies” category captured both foreign exchange reserves held in currencies other than the major currencies identified in Table I.2, and reserves held by those nonreporting countries for which the currency composition was not estimated. The presentation now disaggregates this category into “Other currencies” (currencies other than the major ones identified in the table) and “Unallocated reserves” (reserves held by countries that do/did not report to COFER).

The new presentation also reflects data improvements resulting, in part, from new and revised data reported by countries. The improvements entailed reclassifying part of the reserves that used to fall under “Unspecified currencies” into the major currencies listed in Table I.2.

Country coverage

Virtually all industrial countries, as defined in International Financial Statistics (IFS), report to COFER. The currency shares for industrial countries in Table I.2 are thus calculated from a fixed sample of countries, whose reserves in 2004 represented more than 99 percent of the total reserves held by industrial countries.

The currency shares for developing countries, as defined in IFS, are calculated from a moving sample: not all countries reported, and reporting countries did not necessarily report in all years. Over the 1995–2004 period, the number of developing country reporters ranged from 79 countries to 89 countries, out of a total of 159 developing countries in IFS. The reserves held by these reporting countries accounted for 50 to 65 percent of total developing country reserves over the same period.

On a regional basis, the rate of reporting compliance—measured in terms of the percentage of regional reserves accounted for by the reporters—is highest for countries from Europe and lowest for countries from Asia.

Comparison of the new and old presentations

The new and old presentations are not directly comparable, because the new presentation is based on a smaller pool of reserves whose currency composition is mostly reported by the authorities. Subject to that qualification, the following major differences with the data presented in the 2004 Annual Report are noted.

  • For industrial countries, the major change is an increase in the euro’s share by about 2 percentage points, on average, reflecting primarily data revisions by a major industrial country.

  • For developing countries, the average share of reserves held in U.S. dollars in the period 1999–2003 is higher by 5 percentage points under the new presentation and the euro’s share is higher by 7 percentage points. In contrast, the share of pound sterling is lower by 2 percentage points, and the share of other currencies (new presentation) is about 10 percentage points lower than the share of unspecified currencies (the 2004 Annual Report). These changes reflect the curtailment of estimation under the new methodology and data improvements over the past year.

  • For all countries, as a result, the average share of reserves held in U.S. dollars for the period 1999–2003 is higher by about 4 percentage points under the new presentation; the euro’s share is higher by 4 percentage points; sterling’s share is lower by about 1 percentage point; and the share of other currencies (new presentation) is about 6 percentage points lower than the share of unspecified currencies (the 2004 Annual Report).

For industrial countries, the share of U.S. dollar holdings increased throughout the 1990s, peaking at 74 percent in 1999 and amounting to 72 percent at the end of 2004. The share of the euro in industrial countries’ foreign exchange reserves declined slightly in 2004, to 21 percent, while the share of the yen remained broadly unchanged over 2003–04. The shares of pound sterling and the Swiss franc have remained broadly constant over the past 10 years.

The share of the U.S. dollar in developing countries’ foreign exchange reserves declined to 60 percent in 2004, lower than the average in preceding years. Holdings of the euro rose to 29 percent of those countries’ foreign exchange reserves, nearly 10 percentage points higher than the euro’s share in its initial years (1999 and 2000). Over the past decade, the share of the yen has gradually decreased by about 3 percentage points, to 4 percent at the end of 2004, while the share of pound sterling has increased by about 3 percentage points, to 5 percent in 2004. The share of the Swiss franc has remained below 1 percent over the same period.

Changes in the SDR value of foreign exchange reserves can be decomposed into quantity and valuation (price) changes (Table I.3). Official reserves held in U.S. dollars increased by SDR 128 billion in 2004, as an increase of SDR 176 billion in the quantity of U.S. dollar holdings was offset by a valuation decline of SDR 48 billion. Euro holdings increased by SDR 42 billion, reflecting a quantity increase of SDR 29 billion and a valuation increase of SDR 13 billion. Japanese yen holdings increased by SDR 5 billion as a quantity increase of SDR 6 billion was offset by a valuation decline of SDR 1 billion. Pound sterling holdings increased by SDR 16 billion, whereas Swiss franc holdings declined by SDR 0.5 billion.

Official monetary authorities comprise central banks and also currency boards, exchange stabilization funds, and treasuries, to the extent that they perform monetary authorities’ functions.

The currency composition data in the 2005 Annual Report are not directly comparable to the information in previous annual reports owing to data revision. See Table I.2 for details.

Those foreign exchange reserves that, up to December 31, 1998, were denominated in the former national currencies of the euro area countries and private ECUs.

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