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Reserve Currencies in an Evolving International Monetary System
Author:
Alina Iancu
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Gareth Anderson https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Sakai Ando
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https://orcid.org/0000-0003-2785-4375
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Ethan Boswell
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Mr. Andrea Gamba https://isni.org/isni/0000000404811396 International Monetary Fund

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Shushanik Hakobyan
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Ms. Lusine Lusinyan
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Mr. Neil Meads https://isni.org/isni/0000000404811396 International Monetary Fund

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Mr. Yiqun Wu
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Series:
Departmental Papers
Volume/Issue:
Volume 2020: Issue 002
Language:
English
Publication Date:
17 Nov 2020
DOI:
https://doi.org/10.5089/9781513560298.087
ISBN:
9781513560298
ISSN:
2616-5333
Pages:
67
Keywords:
Foreign exchange reserves; international currency; currency composition of reserves; international debt and cross-border bank claims; DPPP; DP; reserve currency share; currency composition; currency denomination; transfer service; invoicing currency; currency holding; Reserve currencies; Currencies; Digital currencies; International reserves; Reserve assets; Global
Legal-disclaimer:
The Departmental Paper Series presents research by IMF staff on issues of broad regional or cross-country interest. The views expressed in this paper 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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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.

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Cover Departmental Papers
Departmental Papers
ISSN:
2616-5333
Publisher:
International Monetary Fund