Published In
Emerging Markets Review
Document Type
Post-Print
Publication Date
11-2015
Subjects
Monetary policy, Foreign exchange rates, Foreign investments -- Developing countries, International economic integration, Foreign exchange reserves -- Composition
Abstract
This article analyses the relationships among the unit of account and means of exchange functions of an international currency, on the one hand, and its store of value in official use, on the other hand. Historical evidence links the currency composition of reserves to currency movements. The currency composition of reserves is strongly related in the cross-section to both currency movements and the currency denomination of trade. Data limitations make it hard to distinguish these two factors. A panel analysis of 5 countries from central and eastern Europe shows that both trade invoicing and currency movements drive changing official reserve composition. Implications are suggested for the prospects for the renminbi enlarging its current small portion of official foreign exchange reserves.
DOI
10.1016/j.ememar.2015.11.001
Persistent Identifier
http://archives.pdx.edu/ds/psu/16424
Citation Details
Ito, H., McCauley, R. N., & Chan, T. (2015). Currency composition of reserves, trade invoicing and currency movements. Emerging Markets Review, 25, 16-29.
Description
©2015 This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licensesfby-nc-nd/4.0/
This is the authors accepted manuscript for an article subsequently published by Elsevier. The definitive version can be found on the publisher website.