Reserve currency

As a reserve currency - or anchor currency - refers to a significant international currency that can be measured from the extent to which it is used by the actors as a transaction and reserve currency.

Examples:

  • During the Bretton Woods system - from 1945 to about 1973 - was the U.S. dollar global anchor currency.
  • The German Mark served in the European monetary system de facto - not de jure - as an anchor currency.

Anchor currencies currencies are often the largest and dominant trading partner of smaller countries, in America, the U.S. dollar, the Euro in Europe, East Asia about the yen.

History

Historical examples of leading currencies are

  • The Chinese Liang,
  • The Greek drachma (5th century BC ),
  • Indian silver coins ( "punch marked coins "; 4th century )
  • Roman Denarius,
  • The Byzantine solidus,
  • The Islamic Dinar ( Middle Ages )
  • The Rhenish florins ( Middle Ages )
  • The Venetian Ducat (or ducats - Renaissance )
  • The Dutch guilder and
  • More recently, the British pound.

At present ( 2013) is the U.S. dollar is the world's most important reserve currency ( world reserve currency ); some economists also refer to it as a world currency.

Before the introduction of the Euro ( as bank money 1998 cash since January 2002) was the British pound and the yen further reserve currencies besides the U.S. dollar. The euro was second reserve currency after the U.S. dollar; Pound Sterling and Yen compete for the " third place ". The Chinese currency yuan could become a reserve currency one day. But it is not convertible to date (as of 2013), although the governments of Western industrialized countries urged the Chinese government.

Importance

If a country's currency used outside its borders on a large scale to a store of value and transactional purposes, this has great benefits for the country:

  • Seigniorage revenue,
  • Reduced exchange rate uncertainty and
  • Reduced transaction costs.

The economist Barry Eichengreen of Berkeley University in 2011 pointed out that the United States could amass an annual trade deficit of about $ 500 billion due to the reserve currency status of the dollar to date. This corresponded to an annual economic benefit of three percent of the American national income.

Reserve currency

As a reserve currency is usually referred to a used by central banks for currency reserves currency. Most studies show a decline in the importance of the U.S. dollar as a reserve currency and a concomitant increase of the relevant importance of the euro since its introduction in 1999.

Sources: 1970-1984: BIS (Bank for International Settlements ): The evolution of reserve currency diversification, December 1986, p.7, Table 1 (Eng. ) 1995-2012: IMF (International Monetary Fund ): Currency Composition of Official Foreign Exchange Reserves (only absolute numbers) from 1999 to 2005, the ECB ( European Central Bank): The Accumulation of Foreign Reserves, Occasional Paper Series, No. 43

Transaction currency

As transaction currency refers to a currency that is used for international goods and capital transactions to a considerable extent (eg, more than corresponds to their share of world trade ). If a player with a business partner 's home currency as the transaction currency hedging and conversion costs. This can be a competitive advantage over other players in other currency areas.

In 2010 (BIS ), the U.S. dollar was, according to the Bank for International Settlements, the currency in which about 85 percent of all foreign exchange market transactions were executed.

Financial transactions

The increased importance of the euro is also reflected in the financial transactions. In 2003, the share of euro transactions on the currency markets already 25% compared to 50 % was in U.S. dollars and 10% each in pounds sterling and Japanese yen.

The bonds of the euro has replaced the dollar in 2004 as the main currency. The end of September 2004 on 12 000 billion in international bonds with fixed and floating rate borrowings were outstanding worldwide. Of this total 5400 billion Euros, 4800 to U.S. $ 880 billion British pounds, Japanese yen and 500 billion to 200 billion Swiss francs. Since the introduction of the European single currency gained the share of euro ongoing international debt of 19% (1999) to 32% ( 2006), while the share of the U.S. dollar by 49.83 % to approximately 43.12 % fell and that of the the yen halved to 6%. In New issues in 2006 accounted for 46 % on the euro and only 39% on the dollar. In 2008, 32.2 % of international bonds were traded on the Euro.

Moreover, the share of dollar deposits to total foreign account held by the OPEC countries from 75% in the summer of 2001 has fallen to 61.5 % in the summer of 2004. The share of euro-denominated deposits rose during the same period of twelve to twenty percent.

Raw materials

Most raw materials are now settled in U.S. dollars - as well as the economically very important oil trade. From the dollar invoicing of oil are two meanings can be derived:

First, the large and constant dependence of the world economy on crude oil has the consequence that the exchange rate of each country against the U.S. dollar is a crucial economic factor - after all, he influenced to a large extent, commodity prices of a country.

Secondly, caused the almost exclusive dollar invoicing accounting perspective liabilities of the U.S. Federal Reserve over the oil-exporting countries at an enormous extent, since these countries accrue through the oil export large dollar holdings, the so-called petrodollars.

Future Development

While various analysts expect a future decline in the importance of the U.S. dollar, they expect a rise in the importance of the euro and other currencies.

In 2007, the German Bank forecast by 2010, a rise of the euro share to 30 to 40 percent of global currency reserves, which, however, did not come true. They attributed this to the large exchange-rate uncertainty, which is exposed to the U.S. dollar ( among other things due to the huge current account deficit of the U.S.). The bank suspected that the uncertainty could cause stability central banks seeking to greater diversification of their reserves. Moreover, in several countries is a gradual change in the monetary policy ( away from a pure dollar peg towards a binding to a basket of currencies) to watch. A third reason is to be seen in the rise in the reserves themselves; Central banks are under political pressure to invest the reserves earn interest. For this reason, a diversification strategy appears worthwhile.

The former chairman of the U.S. Federal Reserve Alan Greenspan thinks it possible that the euro will replace the U.S. dollar as a reserve currency. According to an econometric analysis of Jeffery Frankel and Menzie Chinn could occur before 2020, if (1) also introduce the remaining EU member states ( including the UK ) the euro in 2020 or (2) the decline in the value of the U.S. dollar will continue. On the other hand, history shows that such a process also may take several decades, as in the case of the replacement of the pound by the U.S. dollar. According to the economist Barry Eichengreen is the main reason of the last detachment of the economically -related continuous devaluation of the pound, coupled with a high versus the dollar inflation. This was in the UK over the first 75 years of the 20th century, about three times as high as in the U.S..

Whether and how quickly the euro may actually rise to the new reserve currency, ie depends on the long- term political and economic developments, such as the success of the Lisbon Strategy. It is aimed to make the EU "the most competitive and dynamic economy in the world." An important factor but also the future economic development of populous countries like India and China.

The World Bank came in 2011 assumes that the dominance of the dollar in the year 2025 coming to an end around and could be replaced by a monetary system, " in which the dollar, the euro and the yuan are as equal currencies."

The German economist Dirk Müller assumes that the Americans have a geopolitical interest to prevent the euro as a reserve currency, and therefore be targeted from the Anglo -Saxon coordinated actions to prevent the euro as a reserve currency.

Swell

  • Currency
Tael Rhenish guilder Bond (finance)
66741
de