New data reveals major shift in how central banks hold foreign exchange reserves since the 1990s

Summary

This article examines a largely overlooked aspect of foreign exchange reserves: the distinction between reserves held as deposits versus securities. Using new data covering 109 countries since 1950, the research documents a major shift from deposits to securities beginning in the late 1990s. This shift reflected reserve accumulation beyond immediate liquidity needs, consistent with mercantilist motives rather than purely precautionary reasons. The findings highlight an important but under-researched dimension of the international monetary system.

Source

bskyNew data reveals major shift in how central banks hold foreign exchange reserves since the 1990scepr.org