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Currencies of External Balance Sheets
Author:
Mr. Cian Allen
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Deepali Gautam https://isni.org/isni/0000000404811396 International Monetary Fund

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Luciana Juvenal https://isni.org/isni/0000000404811396 International Monetary Fund

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Series:
IMF Working Papers
Volume/Issue:
Volume 2023: Issue 237
Language:
English
Publication Date:
17 Nov 2023
DOI:
https://doi.org/10.5089/9798400260100.001
ISBN:
9798400260100
ISSN:
1018-5941
Pages:
49
Keywords:
currency composition; international investment position; foreign currency exposure; wealth effect; currency movement; currency exposure; debt liability; currency mismatch risk; pound sterling; Currencies; Exchange rates; Global financial crisis of 2008-2009; Financial statements; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper assembles a comprehensive dataset of the currency composition of countries’ external balance sheets for 50 economies over the period 1990–2020. We document the following findings: (i) the US dollar and the euro still dominate global external balance sheets; (ii) there were striking changes in the currency composition across countries since the 1990s, with many emerging markets having moved from short to long positions in foreign currency, thus moving away from the so-called “original sin”; (iii) financial and tradeweighted exchange rates are weakly correlated, suggesting the commonly used trade indices do not adequately reflect the wealth effects of currency movements, and (iv) the large wealth transfers across countries during COVID-19 and the global financial crises increased global imbalances in the former, and reduced them in the latter.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund