Editing Reserve currency (section)

==Major reserve currencies==
[[File:Global Reserve Currencies.png|thumb|upright=1.25|Distribution of global reserve currencies]]

===United States dollar===
{{further|International use of the U.S. dollar|Dedollarisation}}

The [[United States dollar]] is the most widely held currency in the allocated reserves. As of the fourth quarter of 2022, the USD accounted for 58.36% of official foreign exchange reserves.<ref>{{cite news|title=Calls to move away from the U.S. dollar are growing — but the greenback is still king|url=https://www.cnbc.com/2023/04/24/economic-and-political-factors-behind-acceleration-of-de-dollarization.html|website=CNBC|date=April 2023 |last1=Chen|first1=Penny}}</ref><ref>{{cite web|title=Currency composition of International Foreign Reserves|url=https://data.imf.org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A4|website=IMF}}</ref>{{update needed|reason=source dated 2022|date=September 2024}} This makes it somewhat easier for the United States to run higher trade deficits with greatly postponed economic ramifications or even postponing a [[currency crisis]]. Central bank US dollar reserves, however, are small compared to private holdings of such debt. If non-United States holders of dollar-denominated assets decided to shift holdings to assets denominated in other currencies, then there could be serious consequences for the US economy. The decline of the pound sterling took place gradually over time, and the markets involved adjusted accordingly.<ref name=Schenk_2009/> However, the US dollar remains the preferred reserve currency in the 2010s because of its stability due to scale and liquidity.<ref>{{cite news|url=https://www.economist.com/business-finance/displaystory.cfm?story_id=16064067&source=hptextfeature |title=In a world of ugly currencies, the dollar is sitting pretty |newspaper=The Economist|date= 6 May 2010|access-date=22 August 2010}}</ref>

The US dollar's position in global reserves is often questioned because of the growing share of unallocated reserves, and because of the doubt regarding dollar stability in the long term.<ref>[http://online.wsj.com/article/SB10001424052748703313304576132170181013248.html Why the Dollar's Reign Is Near an End]</ref><ref>[https://www.reuters.com/article/us-economy-un-idUSTRE74O6EI20110525 "U.N. sees risk of crisis of confidence in dollar"], Reuters, 25 May 2011</ref> However, in the aftermath of the 2008 to 2010 financial crisis, the dollar's share in the world's foreign-exchange trades rose slightly from 85% in 2010 to 87% in 2013.<ref>[http://www.project-syndicate.org/commentary/jeffrey-frankel-argues-that-the-dollar-s-status-as-the-world-s-top-international-currency-is-not-in-jeopardy "The Dollar and Its Rivals"] by Jeffrey Frankel, ''Project Syndicate'', 21 November 2013</ref>{{better source needed|reason=opinion blog|date=May 2023}}{{update inline|date=May 2023}}

The dollar's role as the undisputed reserve currency of the world allows the United States to impose unilateral sanctions against actions performed between other countries, for example the American fine against [[BNP Paribas]] for violations of U.S. sanctions that were not laws of France or the other countries involved in the transactions.<ref>{{cite news |url=https://www.nytimes.com/2014/07/03/upshot/the-dollars-big-role-in-foreign-policy.html |title=In BNP Paribas Case, an Example of How Mighty the Dollar Is |last1=Irwin |first1=Neil |date=1 July 2014 |website=www.nytimes.com |publisher=The New York Times Company |access-date=13 July 2014}}</ref> In 2014, China and Russia signed a 150 billion yuan [[central bank liquidity swap]] line agreement to get around European and American sanctions on their behaviors.<ref>{{cite news |url=https://sg.news.yahoo.com/china-russia-seek-international-justice-agree-currency-swap-185306361.html |title=China, Russia seek 'international justice', agree currency swap line |last1=Smolchenko |first1=Anna |date=13 October 2014 |website=news.yahoo.com |publisher=AFP News |access-date=13 October 2014}}</ref>{{better source|reason=Yahoo news, is there no expert secondary sources?|date=November 2023}}

In 2025, after the decision by the [[Trump administration]] to impose [[Tariffs in the second Trump administration|tariffs as protectionist trade policy]], financial institutions began to rethink the role of US Dollar as reserve currency.<ref>{{Cite news |last=Partington |first=Richard |date=2025-04-11 |title=The damage is done: Trump's tariffs put the dollar's safe haven status in jeopardy |url=https://www.theguardian.com/business/2025/apr/11/the-damage-is-done-trumps-tariffs-put-the-dollars-global-reserve-status-at-risk |access-date=2025-04-14 |work=The Guardian |language=en-GB |issn=0261-3077}}</ref> For example, Ray Attrill, head of FX strategy at [[National Australia Bank]], said, "The whole premise of the dollar as a reserve currency is being challenged, effectively, by what we've seen since Trump's election."<ref>{{Cite news |last=Wee |first=Rae |date=2025-04-11 |title=Mighty U.S. dollar feels heat as Trump's tariffs spark trade turmoil |url=https://www.reuters.com/markets/currencies/mighty-us-dollar-feels-heat-trumps-tariffs-spark-trade-turmoil-2025-04-11/ |access-date=2025-04-14 |work=Reuters}}</ref> George Saravelos at [[Deutsche Bank]] also said that “the market is re-assessing the structural attractiveness of the dollar as the world’s global reserve currency, and is undergoing a process of rapid de-dollarisation.”<ref>{{Cite news |last=Stepek |first=John |date=2025-04-11 |title=Are the US Dollar's Days of Dominance Numbered? |url=https://www.bloomberg.com/news/newsletters/2025-04-11/trump-tariffs-are-the-us-dollar-s-days-of-dominance-numbered |access-date=2025-04-14 |work=Bloomberg}}</ref>

===Euro===
{{Further|International status and usage of the euro}}
The [[euro]] is currently the second most commonly held reserve currency, representing about 20% of international foreign currency reserves. After World War II and the [[Wirtschaftswunder|rebuilding of the German economy]], the [[Deutsche Mark|German mark]] gained the status of the second most important reserve currency after the US dollar. When the euro was [[Introduction of the euro|introduced]] on 1 January 1999, replacing the mark, [[French franc]] and ten other European currencies, it inherited the status of a major reserve currency from the mark. Since then, its contribution to official reserves has risen continually as banks seek to diversify their reserves, and trade in the [[eurozone]] continues to expand.<ref>{{cite web|url=http://www.imf.org/external/pubs/ft/wp/2006/wp06153.pdf |title=The Euro's Challenge to the Dollar: Different Views from Economists and Evidence from COFER (Currency Composition of Foreign Exchange Reserves) and Other Data |first=Ewe-Ghee |last=Lim |publisher=[[International Monetary Fund|IMF]] |date=June 2006 }}</ref>

After the [[euro]]'s share of global official foreign exchange reserves approached 25% as of year-end 2006 (vs 65% for the [[U.S. dollar]]; see table above), some experts have predicted that the euro could replace the dollar as the world's primary reserve currency. See [[Alan Greenspan]], 2007;<ref>[https://www.reuters.com/article/bondsNews/idUSL1771147920070917 "Euro could replace dollar as top currency-Greenspan"], Reuters, 7 September 2007</ref>
and Frankel, Chinn (2006) who explained how it could happen by 2020.<ref>{{cite journal |last= Menzie |first= Chinn |author2= Jeffery Frankel |date= January 2006 |title= Will the Euro Eventually Surpass The Dollar As Leading International Reserve Currency? |journal= [[NBER]] |url= http://www.wage.wisc.edu/uploads/Working%20Papers/chinnfrankel_NBER_eurotopcurrency.pdf |access-date= 11 October 2007 |url-status= dead |archive-url= https://web.archive.org/web/20130825070016/http://www.wage.wisc.edu/uploads/Working%20Papers/chinnfrankel_NBER_eurotopcurrency.pdf |archive-date= 25 August 2013}}</ref><ref>{{cite web|url=http://mpra.ub.uni-muenchen.de/14350/1/MPRA_paper_14350.pdf |title=Aristovnik, Aleksander & Čeč, Tanja, 2010. "Compositional Analysis Of Foreign Currency Reserves In The 1999-2007 Period. The Euro Vs. The Dollar As Leading Reserve Currency," Journal for Economic Forecasting, Vol. 13(1), pages 165-181|publisher=Institute for Economic Forecasting |date=19 July 2010 |access-date=5 July 2010}}</ref>
However, as of 2022 none of this has come to fruition due to the [[European debt crisis]] which engulfed the [[PIGS (economics)|PIIGS countries]] from 2009 to 2014. Instead the euro's stability and future existence was put into doubt, and its share of global reserves was cut to 19% by year-end 2015 (vs 66% for the USD). As of year-end 2020 these figures stand at 21% for EUR and 59% for USD.

===Pound sterling===
The United Kingdom's [[pound sterling]] was the primary reserve currency of much of the world in the 19th century and the first half of the 20th century.<ref name=Schenk_2009/> That status ended after the UK almost bankrupted itself fighting [[World War I]]<ref>{{cite news|last=Crafts|first=Nicolas|title=''Walking wounded: The British economy in the aftermath of World War I''|url=https://voxeu.org/article/walking-wounded-british-economy-aftermath-world-war-i|date=27 August 2014|publisher=VoxEU|access-date=13 April 2020}}</ref> and [[World War II]],<ref>{{cite book |last=Chickering |first=Roger |date= January 2013 |title=''A World at Total War'' |url=https://www.cambridge.org/core/books/world-at-total-war/694AD948D65927E2E9787022F31A05D2#fndtn-contents |publisher=Cambridge University Press |isbn=9781139052382 |access-date=12 April 2020}}</ref> and its place was taken by the United States dollar.

In the 1950s, 55% of global reserves were still held in sterling; but the share was 10% lower within 20 years.<ref name=Schenk_2009/><ref>{{cite web | url=http://www.worldfinancialreview.com/?p=511 |title=The United Nations Charter and Extra-State Warfare: The U.N. Grows Up|date=13 November 2013 |work=The World Financial Review |access-date=15 August 2014}}</ref>

The establishment of the U.S. [[Federal Reserve System]] in 1913 and the economic vacuum following the World Wars facilitated the emergence of the United States as an economic superpower.<ref name=FDS-H-05>{{cite web|url=http://minneapolisfed.org/publications_papers/pub_display.cfm?id=3816|title=Born of a Panic: Forming the Fed System - The Region - Publications & Papers - The Federal Reserve Bank of Minneapolis|publisher=Minneapolisfed.org|access-date=6 December 2014}}</ref>

{{As of|2021|09|30}}, the pound sterling represented the fourth largest proportion (by USD equivalent value) of foreign currency reserves and 4.78% of those reserves.<ref name=IMFCOFER>{{cite web|url = http://data.imf.org/COFER | title = Currency Composition of Official Foreign Exchange Reserves |  publisher = [[International Monetary Fund]] | date = 30 September 2021 | access-date = 27 October 2021}}</ref>

===Japanese yen===
Japan's [[yen]] is part of the [[International Monetary Fund]]'s (IMF) [[special drawing rights]] (SDR) valuation. The SDR currency value is determined daily by the IMF, based on the exchange rates of the currencies making up the basket, as quoted at noon at the London market. The valuation basket is reviewed and adjusted every five years.<ref name=imff>[http://www.imf.org/external/np/fin/data/rms_sdrv.aspx "SDR Valuation"], International Monetary Fund website: "The currency value of the SDR is determined by summing the values in U.S. dollars, based on market exchange rates, of a basket of major currencies (the U.S. dollar, Euro, Japanese yen, and pound sterling). The SDR currency value is calculated daily (except on IMF holidays or whenever the IMF is closed for business) and the valuation basket is reviewed and adjusted every five years."</ref>

The SDR Values and yen conversion for government procurement are used by the [[Japan External Trade Organization]] for Japan's official procurement in [[international trade]].<ref name=jetro>[http://www.jetro.go.jp/en/database/procurement/procurement.html Japanese Government Procurement], [[Japan External Trade Organization]] website (accessed: 6 January 2015)</ref>

===Chinese renminbi===
{{hatnote|The currency of China is the renminbi; the [[yuan (currency)|yuan]] is its primary unit}}
{{see also|Internationalization of the renminbi}}
The Chinese renminbi officially became a supplementary forex reserve asset on 1 October 2016.<ref name="home_Thei">{{Cite web |title=Going global: Trends and implications in the internationalisation of China's currency |author= |publisher=[[KPMG]] |date=11 January 2017 |access-date=20 April 2021 |url=https://home.kpmg/cn/en/home/insights/2017/01/going-global-chinas-currency.html |archive-date=5 December 2021 |archive-url=https://web.archive.org/web/20211205012115/https://home.kpmg/cn/en/home/insights/2017/01/going-global-chinas-currency.html |url-status=dead }}</ref> It represents 10.92% of the IMF's [[Special Drawing Rights]] (SDR) currency basket.<ref name="IMF">{{cite web|url=http://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14/51/Special-Drawing-Right-SDR|title=Special Drawing Right (SDR)}}</ref><ref>{{cite news|url=https://www.bloomberg.com/news/articles/2015-11-30/imf-backs-yuan-in-reserve-currency-club-after-rejection-in-2010|title=IMF Approves Reserve-Currency Status for China's Yuan|newspaper=Bloomberg.com|date=30 November 2015|via=www.bloomberg.com}}</ref> The Chinese renmimbi is the third reserve currency after the U.S. dollar and euro within the basket of currencies in the SDR.<ref name="IMF"/>  (As shown in the [[#Global currency reserves|table above]], the renmimbi is the sixth largest component of international currency reserves.)

===Canadian dollar===
A number of central banks (and commercial banks) keep [[Canadian dollars]] as a reserve currency. In the economy of the Americas, the Canadian dollar plays a similar role to that played by the [[Australian dollar]] (AUD) in the [[Asia-Pacific]] region. The Canadian dollar (as a regional reserve currency for banking) has been an important part of the British, French and Dutch Caribbean states' economies and finance systems since the 1950s.<ref name=bankofcanada>[http://www.bankofcanada.ca/wp-content/uploads/2014/05/boc-review-spring14-pomorski.pdf "The Canadian Dollar as a Reserve Currency"] by Lukasz Pomorski, Francisco Rivadeneyra and Eric Wolfe, Funds Management and Banking Department, [[Bank of Canada|The Bank of Canada]] Review, Spring 2014</ref> The Canadian dollar is also held by many central banks in Central America and South America. It is held in Latin America because of [[remittance]]s and international trade in the region.<ref name=bankofcanada/>

Because Canada's primary foreign-trade relationship is with the United States, Canadian consumers, economists, and many businesses primarily define and value the Canadian dollar in terms of the United States dollar. Thus, by observing how the Canadian dollar floats in terms of the US dollar, foreign-exchange economists can indirectly observe internal behaviours and patterns in the US economy that could not be seen by direct observation. Also, because it is considered a [[petrocurrency|petrodollar]], the Canadian dollar has only fully evolved into a global reserve currency since the 1970s, when it was floated against all other world currencies.

The Canadian dollar, from 2013 to 2017, was ranked fifth among foreign currency reserves in the world, overtaking the Australian dollar, but is then being{{clarify|date=April 2025}} overtaken by the Chinese Yuan.<ref>{{cite web |url=http://www.imf.org/external/np/sta/cofer/eng/ |title=Currency Composition of Official Foreign Exchange Reserves (COFER)|date=30 September 2014 |website=www.imf.org |publisher=International Monetary Fund |access-date=1 October 2014}}</ref>

===Swiss franc===
The [[Swiss franc]], despite gaining ground among the world's foreign-currency reserves<ref>[https://www.cnbc.com/2013/02/14/is-the-dollar-dying-why-us-currency-is-in-danger.html "Is the Dollar Dying? Why US Currency Is in Danger"] by Jeff Cox, [[CNBC]], 14 February 2013</ref> and often being used in denominating foreign loans,<ref>[https://www.economist.com/blogs/freeexchange/2010/07/currency "A new global reserve?"], ''[[The Economist]]'', 2 July 2010</ref> cannot be considered as a world reserve currency, since the share of all foreign exchange reserves held in Swiss francs has historically been well below 0.5%. The daily trading market turnover of the franc, however, ranked fifth, or about 3.4%, among all currencies in a 2007 survey{{needs update|date=April 2025}} by the [[Bank for International Settlements]].<ref name="Triennial-2007">{{cite web
|url=http://www.bis.org/publ/rpfxf07t.pdf
|title=Triennial Central Bank Survey, Foreign exchange and derivatives market activity in 2007
|date=December 2007
|publisher=[[Bank for International Settlements]]
}}</ref>