Talking about the dollar as an reserve currency next week [2], and noticed these interesting trends.

Figure 1: Share of FX turnover in CNY (red square), in CAD (chartreuse triangle), in April. Normalized shares to 1.00. Source: BIS Triennial Surveys.

A similar pattern holds for central bank reserve holdings as reported in the IMF’s COFER.

Figure 2: Share of central bank reserves in CNY (red), in CAD (chartreuse). Source: IMF.

While there’s been some retrenchment in CNY holdings share since 2022, there’s a complication in interpreting this trend. Most if not all of the reduction can be poentially accounted for by CNY depreciation against the USD (9% in log terms, compared while the ratio has dropped about 5 ppts).

Still, I don’t think the CNY will become a major international currency anytime soon, as discussed here (remember, the euro accounts for 18.5 ppts of total central bank fx

Keep reading this article on Econbrowser Blog - James Hamilton & Menzie Chinn.

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