and 30 years of turnover data. Currently, in a project with Jeffrey Frankel and Hiro It, regression is performed on Reserve Bank position data. In aggregate, we have 50 years of estimates (about 25 years of actual data, and fewer years of (selected) individual central bank data)
First, we look at the reserves disclosed by IMF members:
figure 1: Year-end foreign exchange deposit holdings, US dollars (blue bars), euros (orange), yen (green), pounds sterling (blue), RMB (red), other (pink), unallocated (gray), all stocks 1.0, stacked. The 2023 observation is the third season of 2023. Source: International Monetary Fund COFER, accessed January 7, 2024, and author's calculations.
Looking at Chart 1 without further investigation, one would think that the dollar has regained its luster after years of neglect. However, if one notices that the gray area is “unallocated” or undisclosed, and if one considers that a large portion of it is USD, the decline looks less significant. Regardless of the decline in the US dollar, it is largely caused by “other” factors, and the biggest changes in “other” factors are the Australian dollar and the Canadian dollar.
Around 2004, the IMF provided estimates of the share of reserve holdings in its annual reports. I use reported figures for 2000-01 to extrapolate the proportion of unallocated reserves for each currency to produce estimated shares (the proportions are USD 0.5, EUR 0.07, GBP 0.09, JPY 0.07 and CHF 0.01). This yields the following picture.
figure 2: The share of foreign exchange reserves held by the central bank in US dollars (blue), euros (orange), traditional euro currencies (tan squares), yen (green), pounds sterling (sky blue), Swiss francs (purple), yuan (red) )express. For data after 1999, estimates based on COFER data and the allocation of unallocated reserves are described in the text. source: Chin and Frankel (2007)IMF COFER accessed 7 January 2024, and author's estimates.
Note that based on the estimated share of the U.S. dollar, the United States has maintained its dominance, with only a slight decline in its share of total foreign exchange reserves. The largest decline occurred before 2015.
FX trading volumes tell a similar story.
image 3: Share of FX trading volume among all FX instruments in USD (blue, left scale), EUR (orange), JPY (green), GBP (sky blue), CHF (purple), RMB (red). Linear interpolation between survey years. source: Bank for International Settlementsand the author's calculations.
