Reserve Currencies
After the Breton Woods Agreement was signed in 1944 the US dollar was established as the major currency to which other currencies were pegged. This turned the US dollar in the global reserve currency. However, there are other international reserve countries besides the USA.
The European Monetary System was created in 1978 by a plan between nine of the member states of the European Community. This system was governed by the European Fund of the Monetary Cooperation. In 1999 the transition to the euro, which represented the common European currency of these countries (also known as the Euro zone), was made. The euro bills can be found in 5, 10, 20, 50, 100, 200 and 500 euro denominations. Additionally, euro coins can be found in 1 and 2 euros as well as 1, 2, 5, 10, 20 and 50 cent denominations.
As a result the euro zone countries held their reserves in the euro currency. On the other hand, the countries of the Southeast Asia hold their reserves in the Japanese yen. However, depending on the prevailing international conditions, the portfolio of reserve currencies that a specific central bank holds can be changed to include the Swiss franc as well.
Global currency reserves
Here are the official foreign exchange reserves as a percentage of total identified holdings.
|
|
'00 | '01 | '02 | '03 | '04 | '05 | '06 | '07 |
|---|---|---|---|---|---|---|---|---|
| US dollar | 70.5% | 70.7% | 66.5% | 65.8% | 65.9% | 66.4% | 65.7% | 63.3% |
| Euro | 18.8% | 19.8% | 24.2% | 25.3% | 24.9% | 24.3% | 25.2% | 26.5% |
| Pound sterling | 2.8% | 2.7% | 2.9% | 2.6% | 3.3% | 3.6% | 4.2% | 4.7% |
| Japanese yen | 6.3% | 5.2% | 4.5% | 4.1% | 3.9% | 3.7% | 3.2% | 2.9% |
| Swiss franc | 0.3% | 0.3% | 0.4% | 0.2% | 0.2% | 0.1% | 0.2% | 0.2% |
| Other | 1.4% | 1.2% | 1.4% | 1.9% | 1.8% | 1.9% | 1.5% | 1.8% |
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