The Currency Composition of Foreign Exchange Reserves: Retrospect and Prospect

By Barry Eichengreen, Donald J. Mathieson. Social Science Research Network, 2000

165 citations recorded by the source corpus.

This paper examines the determinants of the currency composition of international reserves. Our single most important finding is the striking stability over time of the relationship between the demand for reserves denominated in different currencies and its principal determinants: trade flows, financial flows and currency pegs. This result contrasts sharply with recent predictions of sharp shifts in the currency composition of central banks’ holdings of foreign exchange. The message would seem to be that in this, as in other respects, the international monetary system is in a mode of gradual, continuous evolution, not of rapid, discontinuous change.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/8ba2d5da25b2b2455028a0b5d6d6a3f72d141280

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Citations in the corpus

Exorbitant privilege and exorbitant duty (2010, background): “…is thus reduced to a childish game in which, after each round, the winners return their marbles to the losers The discovery of that secret [namely, that no adjustment takes place] has a profound impact on the psychology of nations This is the marvelous secret of the deﬁcit without tears,…”
International Currency Exposures, Valuation Effects, and the Global Financial Crisis (2015, unknown): “Finally, estimates of the currency composition of official reserve assets are calculated through a combination of national data sources, COFER data and the implementation of the empirical model developed by Eichengreen and Mathieson (2000).”
Why the Euro Will Rival the Dollar (2008, methodology): “21 In some of our regression tests we tried adding to our list of determinants a measure of the popularity of the major currencies for smaller currencies to peg to (as suggested by Eichengreen and Mathieson, 2000).”
The Geographical Composition of National External Balance Sheets: 1980-2005 (2012, unknown): “Eichengreen and Mathieson (2000) report the results of estimating this model for a sample of eighty-four emerging and transition economies for the period 1979–96. We collect data for the right-handside variables and multiply by the estimated coefficients reported in their paper to obtain estimates o”