I was looking through the Currency Composition of Official Foreign Exchange Reserves database (COFER) of the IMF. What is interesting about this is that the percentage of reserves held as US dollar claims have dropped dramatically for emerging economies from over 50% in 2000 to less than 30% in 2008. However, advanced economies continued to hold reserves in US dollar assets and it has been in the range of 55% to 65% throughout the time period (1999 to 2009). The database divides total reserves by five major currencies, and "other currencies". There are also two other lines in the database. "Unallocated Reserves" and "Allocated Reserves". As the IMF website states:The Unallocated Reserves line captures the difference between the total reserves data reported to IFS and to COFER, for each of the country groupings mentioned above. It consists of two components:Very little estimation is used in producing the COFER tables. Estimation is undertaken only for data gaps of four quarters or less. There are about 33 advanced countries, 107 emerging market economies in the database. THE PITFALL OF THIS DATABASE IS THAT THE COUNTRIES PART OF EACH SEGMENT IS UNKNOWN. I looked around for quite sometime and couldn't find the composition of countries in the two divisions.
- The total reserves of nonreporting countries, i.e., the countries within each grouping, which do not report currency composition data to COFER, and
any discrepancy between reporters’ data on total reserves as reported to COFER and to IFS.- The Allocated Reserves line equals the reporters’ data on total reserves as reported to COFER.
Interestingly, the drop in USD dollar reserves is not offset with an increase in the EUR / GBP / JPY or any currency. What has happened is that the unallocated reserves data spikes up.There is a lot to see from this trend provided there is an understanding on what the "Unallocated reserves" imply. It is too early to say that the US dollar is losing its purpose as an international reserve currency.
2 comments:
Vimal: Interesting stuff. I found this blog post while doing some research into exactly the same subject. Many of my graphs look identical to yours, save for some formatting details. Nevertheless, have you looked at the growing gap between total world unallocated reserves and the sum of the same for Advanced and developing nations?
The identity is (Total Unallocated World Reserves) - (Unallocated Reserves, Advanced + Unallocated Reserves, Developing). There is a growing gap here.
True. I did look at that as well. However, there's a problem in here. Assuming that all the Chinese reserves (minus the available sum known on the Treasury International Capital System database http://www.treas.gov/tic/ ) are subtracted out of "Unallocated Reserves, Developing" the story is very different. But that is guesswork altogether. . .
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