The dollar’s share of global reserve currencies has been in steady decline over the past 20 years as central banks turn to nontraditional currencies, including the renminbi, to diversify their holdings. Reserve managers have moved out of dollars in two directions, with one quarter headed into the renminbi and three quarters into currencies of smaller countries that have traditionally played a limited role as reserve assets. The findings are in a new paper issued by the International Monetary Fund titled: “The Stealth Erosion of Dollar Dominance: Active Diversifiers and the Rise of Nontraditional Reserve Currencies.” It was co-authored by Serkan Arslanalp of the IMF , Barry Eichengreen of the University of California Berkeley and Chima Simpson-Bell also of the IMF. “A characterization of the evolution of the international reserve system in the last 20 years is thus as gradual movement away from the dollar, a recent […]