Print

Reserve Currencies: Are Changes Possible?

70
Rubric: The World at the Beginning of Millennium
DOI: 10.20542/0131-2227-2025-69-9-5-15
EDN: IRAUDT
A. Kholopov, ORCID 0000-0002-7588-9057, a.kholopov@my.mgimo.ru
Moscow State Institute of International Relations (MGIMO University), 76, Vernadskogo Prosp., Moscow, 119454, Russian Federation.
PDF (RUS) | PDF (ENG)

Received 23.04.2025. Revised 12.05.2025. Accepted 30.06.2025.

Abstract. The article examines the main trends in the changing structure of official reserve assets. For more than half a century the US dollar has been the dominant reserve currency in most countries. The dollar’s reserve currency status has been based on its global use for trade invoicing, cross-border investment and exchange rate anchoring. The dollar’s dominance was also supported by the US status as a global power, one that helps to guarantee the security of its allies. But, since the beginning of this century, two important trends can be noted: a significant increase in the total volume of global reserve assets and a decrease in the dollar’s share in them. Ìany central banks, especially holders of excessive reserve assets, have taken the path of diversifying their foreign exchange reserves, increasing the share of nontraditional reserve currencies and gold, and reducing dependence on the dollar. The dominant role of the dollar is also under pressure from the policies pursued by issuers of competing currencies in order to strengthen their international role, primarily by the EU and China. A potential threat to the dollar’s dominance may be the development by many countries of the central bank digital currencies, which are expected to be used in cross-border transactions. The trend of de-dollarization of reserve assets is promoted by the US itself, which actively uses the policy of sanctions to achieve its foreign policy goals, which undermines confidence in the dollar. Rising geopolitical tensions could trigger strategic adjustments in the structure of foreign exchange reserves.

Keywords: official reserve assets, reserve currencies, US dollar, gold, central bank digital currencies, CBDC


REFERENCES

1. Arslan Y., Cantú C. The Size of Foreign Exchange Reserves. BIS Papers no. 104. Basel, Bank for International Settlements, October 2019, pp. 1-24. Available at: https://www.bis.org/publ/bppdf/bispap104.htm (accessed 14.02.2025).

2. Eichengreen B., Hausmann R., Panizza U. Currency Mismatches, Debt Intolerance and Original Sin: Why They Are Not the Same and Why It Matters. NBER Working Paper 10036. NBER, October 2003. 62 p. Available at: https://www.nber.org/system/files/working_papers/w10036/w10036.pdf (accessed 29.02.2025).

3. Summers L. Reflections on Global Account Imbalances and Emerging Markets Reserves Accumulation. L.K. Jha Memorial Lecture. Mumbai, Reserve Bank of India, 24.03.2006. Available at: https://www.harvard.edu/president/news-speeches-summers/2006/reflections-on-global-account-imbalances-and-emerging-markets-reserve-accumulation (accessed 26.02.2025).

4. Hofmann B., Shin H.S., Villamizar-Villegas M. FX Intervention and Domestic Credit: Evidence from High Frequency Micro Data. BIS Working Paper no. 774. Basel, Bank for International Settlements, November 2021. 26 p. Available at: https://www.bis.org/publ/work774.pdf (accessed 24.02.2025).

5. Iancu A., Anderson G., Ando S. et al. Reserve Currencies in an Evolving International Monetary System. IMF Departmental Paper no. 20/02. Washington, International Monetary Fund, 17.11.2020. 67 p. Available at: https://www.imf.org/en/Publications/Departmental-Papers-Policy-Papers/Issues/2020/11/17/Reserve-Currencies-in-an-Evolving-International-Monetary-System-49864 (accessed 20.02.2025).

6. Jeanne O. The Dollar’s Exposure to Asia Could Erode its Dominance. Washington, Peterson Institute for International Economics, 11.01.2024. Available at: https://www.piie.com/blogs/realtime-economics/2024/dollars-exposure-asia-could-erode-its-dominance (accessed 07.03.2025).

7. Eichengreen B., Mehl A., Chitu L. Mars or Mercury? The Geopolitics of International Currency Choice. NBER Working Paper no. 24145. NBER, December 2017. 48 p. Available at: https://www.nber.org/system/files/working_papers/w24145/w24145.pdf (accessed 22.02.2025).

8. Bertaut C., von Beschwitz B., Curcuru S. The International Role of the U.S. Dollar. Post-COVID Edition. FEDS Notes. Washington, Board of Governors of the Federal Reserve System, 23.06.2023. Available at: https://www.federalreserve.gov/econres/notes/feds-notes/the-international-role-of-the-us-dollar-post-covid-edition-20230623.html (accessed 06.02.2025).

9. Bernanke B. Federal Reserve Policy in an International Context. 16th Jacques Polak Annual Research Conference. Washington, International Monetary Fund, November 2015. 51 p. Available at: https://www.imf.org/external/np/res/seminars/2015/arc/pdf/Bernanke.pdf (accessed 24.02.2025).

10. He Dong, Yu Xiangrong. Network Effects in Currency Internationalisation: Insights from BIS Triennial Surveys and Implications for the Renminbi. Journal of International Money and Finance, November 2016, vol. 68, pp. 203-229. Available at: https://dx.doi.org/10.2139/ssrn.2500608

11. Arslanalp S., Eichengreen B., Simpson-Bell C. The Stealth Erosion of Dollar Dominance: Active Diversifiers and the Rise of Nontraditional Reserve Currencies. IMF Working Paper WP/22/58. Washington, International Monetary Fund, 24.03.2022. 40 p. Available at: https://www.imf.org/en/Publications/WP/Issues/2022/03/24/The-Stealth-Erosion-of-Dollar-Dominance-Active-Diversifiers-and-the-Rise-of-Nontraditional-515150 (accessed 21.02.2025).

12. Aizenman J., Cheung Yin-Wong, Qian Xingwang. The Currency Composition of International Reserves, Demand for International Reserves, and Global Safe Assets. NBER Working Paper no. 25934. Washington, NBER, June 2019. 37 p. Available at: http://doi.org/10.3386/w25934

13. Eichengreen B., Macaire C., Mehl A., Monnet E., Naef A. Is Capital Account Convertibility Required for the Renminbi to Acquire Reserve Currency Status? Banque de France Working Paper no. 892. Paris, Banque de France, November 2022. 34 p. Available at: https://publications.banque-france.fr/sites/default/files/medias/documents/wp892.pdf (accessed 15.03.2025).

14. Mackel P., Chew J., Chen J. RMB – Internationalisation Is Not Over. Pringle R., Popowicz J.E., eds. HSBC Reserve Management Trends 2024. Central Banking, April 2024, ðp. 53-68. Available at: https://www.centralbanking.com/hsbc-reserve-management-trends-2024 (accessed 20.03.2025).

15. Arslanalp S., Eichengreen B., Simpson-Bell C. Gold as International Reserves: A Barbarous Relic No More? IMF Working Paper WP/23/14. Washington, International Monetary Fund, 27.01.2023. 34 p. Available at: https://www.imf.org/en/Publications/WP/Issues/2023/01/27/Gold-as-International-Reserves-A-Barbarous-Relic-No-More-528089 (accessed 27.03.2025).

16. Li Yuefen. Trends, Reasons and Prospects of De-dollarization. South Center Research Paper no. 181. Geneva, South Center, 14.08.2023. 20 p. Available at: https://www.econstor.eu/bitstream/10419/278680/1/1860233651.pdf (accessed 12.04.2025).


SOURCES

1. Monetary and Financial Statistics. Washington, International Monetary Fund. Available at: https://data.imf.org/?sk=b83f71e8-61e3-4cf1-8cf3-6d7fe04d0930&sid=1393552803658 (accessed 22.03.2025).

2. World Economic Outlook Database. Washington, International Monetary Fund, October 2024. Available at: https://www.imf.org/en/Publications/WEO/weo-database/2024/October (accessed 22.01.2025).

3. Guidance Note on the Assessment of Reserve Adequacy and Related Considerations. Washington, International Monetary Fund, June 2016. 40 p. Available at: https://www.imf.org/en/Publications/Policy-Papers/Issues/2016/12/31/Guidance-Note-on-the-Assessment-of-Reserve-Adequacy-and-Related-Considerations-PP5046 (accessed 29.01.2025).

4. Currency Composition of Official Foreign Exchange Reserves. Washington, International Monetary Fund. Available at: https://data.imf.org/en/datasets/IMF.STA:COFER (accessed 05.04.2025).

5. International Reserves of the Russian Federation. Moscow, Bank of Russia. (In Russ.) Available at: https://cbr.ru/hd_base/mrrf/mrrf_m/ (accessed 05.03.2025).

6. Annual Report on Exchange Arrangements and Exchange Restrictions 2023. Washington, International Monetary Fund, 19.12.2024. 4925 p. Available at: https://www.imf.org/en/Publications/Annual-Report-on-Exchange-Arrangements-and-Exchange-Restrictions/Issues/2024/12/19/Annual-Report-on-Exchange-Arrangements-and-Exchange-Restrictions-2023-541890 (accessed 02.02.2025).

7. Ito H., McCauley R. The Dataset of the Currency Composition of Foreign Exchange Reserves. Available at: https://web.pdx.edu/~ito/IM_dataset.htm (accessed 07.03.2025).

8. The European Economic and Financial System: Fostering Openness, Strength and Resilience. Brussels, European Commission, COM(2021)32, 19.01.2021. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021DC0032&qid=1611728656387 (accessed 12.03.2025).

9. 2021 RMB Internationalization Report. Beijing, The People’s Bank of China. 81 p. Available at: http://www.pbc.gov.cn/en/3688110/3688172/4157443/4433239/2021122809344466286.pdf (accessed 06.03.2025).

10. Project mBridge Reached Minimum Viable Product Stage. Basel, Bank for International Settlements, November 2024. Available at: https://www.bis.org/about/bisih/topics/cbdc/mcbdc_bridge.htm (accessed 05.03.2025).

11. Strengthening American Leadership in Digital Financial Technology. Executive Order 14178 of January 23, 2025. Federal Register, Washington, 31.01.2025, vol. 90, no. 20, pp. 8647-8650. Available at: https://www.govinfo.gov/content/pkg/FR-2025-01-31/pdf/2025-02123.pdf (accessed 03.05.2025).


For citation:
Kholopov A. Reserve Currencies: Are Changes Possible?. World Eñonomy and International Relations, 2025, vol. 69, no. 9, pp. 5-15. https://doi.org/10.20542/0131-2227-2025-69-9-5-15 EDN: IRAUDT

Contents World Eñonomy and International Relations. 2025, vol. 69, no. 9

Comments (0)

Show

No comments

Add comment







Indexed

 

 

 

 

Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies

 

Current Issue
2026, vol. 70, No. 1
Topical Themes of the Issue:
  • Global Dominance of Dollar: Theory and Prospects
  • Japan’s Economic Policy: A Paradigm Shift?
  • The Chinese Model of Cognitive Security: “The Right to Interpret” as a Resource of Power
  • Features of South Korea’s Current Development Stage: Growing Pains or Systemic Crisis?
Announcement

Dear authors of the journal!

Please note that the author's copies of the issues in which your texts are published are kept in the editorial office for no more than one year. After this period expires, the editorial office has the right to dispose of unclaimed copies at its own discretion.

Dear authors of the journal!

We would like to inform you that the materials proposed for publication in our journal must be submitted only through the form located on the journal website in the “Submit an article” section.

 

Submit an Article
Submit an Article
INVITATION FOR PUBLICATION
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.

Scientific and Practical Seminar of IMEMO, RIAC
and the MEMO Journal