Alina Iancu, Gareth Anderson, Sakai Ando, Ethan Boswell, Andrea Gamba, Shushanik Hakobyan, Lusine Lusinyan, Neil Meads, and Yiqun Wu
INTERNATIONAL MONETARY FUND
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.