The report is published by the IMF quarterly, and can be downloaded from the institution’s website. Monetary gold is not covered in the foreign exchange reserves reported in COFER, but gold is part of reserves assets, which is a broader concept than that of COFER. COFER data for individual countries are kept strictly confidential given the senstive nature of the data. Access to individual country data is limited to only four IMF staff on a need-to-know basis.
IMF DATA
COFER data are publicly disseminated on aquarterly frequency in aggregate format so as to safeguard individualcountry information. In our 2022 paper, we identified 46 “active diversifiers,” defined as countries with a share of foreign exchange reserves in nontraditional currencies of at least 5 percent at the end of 2020. These include major advanced vintage fx economies and emerging markets, including most of the Group of Twenty (G20) economies. By 2023, at least three more countries (Israel, Netherlands, Seychelles) have joined this list. That work also showed that the demand for gold by central banks responded positively to global economic policy uncertainty and global geopolitical risk.
Gold has re-emerged as a favored central bank reserve asset.
The share of US dollar holdings in the allocated reserves increased to 57.80 percent from 57.30 percent in 2024Q3, due to the depreciation of reserve currencies against the US dollar. The IMF conducts the COFER survey on a quarterly basis and publishes at theend of every quarter the aggregate data for the previous quarter. The report covers the reserve composition of 149 nations, divided into the three categories of “world”, “advanced economies”, and “emerging and developing economies”. Reserve composition of reporting central banks in each category is then detailed further into the following items.
- Some have suggested that what we have characterized as an ongoing decline in dollar holdings and rise in the reserve share of nontraditional currencies in fact reflects the behavior of a handful of large reserve holders.
- To be sure, it is possible, as some have argued, that the same countries that are seeking to move away from holding dollars for geopolitical reasons do not report information on the composition of their reserve portfolios to COFER.
- The long view back to the 1960s shows that the USD’s share of global reserve currencies was a lot lower in the 1970s and 1980s.
This recent trend is all the more striking given the dollar’s strength, which indicates that private investors have moved into dollar-denominated assets. At the same time, this observation is a reminder that exchange rate fluctuations can have an independent impact on the currency composition of central bank reserve portfolios. Changes in the relative values of different government securities, reflecting movements in interest rates, can similarly have an impact, velocity trade although this effect will tend to be smaller, insofar as major currency bond yields generally move together. In any event, these valuation effects only reinforce the overall trend.
IMF’s Work
Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies—the euro, yen, and pound. Rather, it has been accompanied by a rise in the share of what we have called nontraditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies. The most recent data extend this trend, which we had pointed out in an earlier IMF paper and blog.
The rise of the “nontraditional reserve currencies.”
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COFER data are reported to the IMF on a voluntary and confidential basis by central banks from over 140 economies. At present there are 149 reporters, consisting of the monetary authorities of IMF member countries and non-IMF member countries/economies; and of other foreign exchange reserves holding entities. COFER includes a list of the participating economies that agreed to disclose their names. SDDS Plus adherents are required to participate in the COFER database and to disclose their participation. The data published on this website are aggregates for each currency for the world, advanced economies, and emerging markets and developing economies. Starting 2015Q2, the IMF decided to cease the publication of the latter two geographical breakdowns to avoid possible residual disclosure of individual data with the release of the list of countries who have agreed to publish their names as COFER reporters.
COFER data are only published in the format of statistical aggregates. So it’s not one currency that’s gaining against the dollar; it’s that a lot of “nontraditional reserve currencies” are gaining share. The major alternatives to the USD and the EUR, the “nontraditional reserve currencies,” as the IMF calls them, are the colorful tangle at the bottom of the chart. The COFER database contains end-of-period quarterly data with a one-quarter lag. The COFER data in the format of statistical aggregates are released on the last business day of each quarter.
- So it’s not one currency that’s gaining against the dollar; it’s that a lot of “nontraditional reserve currencies” are gaining share.
- If this pace continues, the dollar’s share will kiss 50% in 10 years.
- The chart shows the share of the USD at year end except in 2024, for which we use the Q2 figure.
- The share collapsed from 85% in 1977 to 46% in 1991, as inflation had exploded in the US in the 1970s and into the 1980s, and the world lost confidence in the Fed’s willingness to get this inflation under control.
But China’s renminbi keeps losing ground.
By examining the growth of overall forex reserves, we can gain an idea on the dynamism of global trade, and the growth rate of global imbalances as international claims increase with rising central bank reserves. One can regard each dollar in a central bank’s coffers as a claim on another nation’s economy, and the larger these claims are, the greater international imbalances must be. This is a consequence of axitrader review the fact that, since international trade is mostly conducted in U.S. dollars, central banks end up with an excess of the U.S. currency, but prefer to reallocate a proportion of reserves to other currencies for diversification purposes. Although COFER is a very valuable tool for forex analysis, it is usefulness is limited by a number of factors.
The ratio of reporting central banks to non-reporting banks is highest for Europe and the Western Hemisphere. Reporters are recommended to use end-of-period market exchange rates to convert their reserves denominated in non-U.S. By the 1990s, with inflation on decline for a decade, confidence returned, and central banks loaded up on dollar-denominated assets again, until the euro came along, which combined the major European reserve currencies into one, making it a solid alternative to the dollar. The share of euro holdings in the allocated reserves decreased to 19.83 percent from 20.03 percent in 2024Q3. However, if the exchange rates had not moved, the euro share would have increased by 0.71 percentage point (p.p.).
Thisfollowed the Board decision to include RMB in the Special Drawing Right(SDR) basket of currencies as a fifth currency along with the U.S. dollar,the euro, Japanese yen, and pound sterling, effective October 1, 2016. When the IMF added the RMB to its basket of currencies backing the Special Drawing Rights (SDR) in 2016, the currency was seen as the coming threat to the dominance of the USD as global reserve currency. China is the second largest economy in the world, and it makes sense that it would have a major reserve currency. The long view back to the 1960s shows that the USD’s share of global reserve currencies was a lot lower in the 1970s and 1980s. The share collapsed from 85% in 1977 to 46% in 1991, as inflation had exploded in the US in the 1970s and into the 1980s, and the world lost confidence in the Fed’s willingness to get this inflation under control. You may continue to access the retiring system at legacydata.imf.org until May 31, 2025.
So the exchange rates between the USD and other reserve currencies change the magnitude of the non-USD assets – but not of the USD-assets. Central banks have not been “dumping” their dollar-assets – in dollar amounts, their dollar-holdings haven’t changed much and are not far off the peak in 2021. But as overall foreign exchange reserves grow, they’re taking on assets denominated in many alternative currencies, and the dollar’s share of the total declines.
It’s a central bank “reserve asset.” So it doesn’t really fit into this discussion of foreign exchange reserves. But it can replace foreign exchange reserves, such as Treasury securities, on a central bank balance sheet. The RMB is handicapped by capital controls and convertibility issues. Even the Australian dollar (brown) now has a larger share than the RMB. This report provides a comprehensive view of global currency reserves, showing both the overall allocation by currency (pie chart) and the trends in allocated reserves over time (stacked column chart with table). The Currency Composition of Official Foreign Exchange Reserves or COFER Report, is the most useful public source of data relating to central bank reserve allocations.
Excluded are assets denominated in a central bank’s local currency, such as the Fed’s holdings of Treasury securities, and the ECB’s holdings of euro-denominated assets. These US-dollar denominated assets include US Treasury securities, US agency securities, US government-backed MBS, US corporate bonds, even US stocks, held by central banks other than the Fed. The share of other currencies in the allocated reserves (i.e., those excluding the US dollar, the euro, and the renminbi) decreased to 20.19 percent in 2024Q4 from 20.50 percent in 2024Q3, which was mainly attributed to their depreciation against the US dollar. This table provides a breakdown of the currency composition of official foreign exchange reserves held by countries around the world. The main disadvantage of the COFER report is that its coverage is weakest for Asia and Middle East/Africa, where exporter nations with the largest forex reserves tend to be clustered. Another problem is that, although coverage of currencies like the Euro or the USD is very good, information relating to reserve items like gold is not a part of the data breakdown.
Taking a longer view, over the last two decades, the fact that the value of the US dollar has been broadly unchanged, while the US dollar’s share of global reserves has declined, indicates that central banks have indeed been shifting gradually away from the dollar. Some have suggested that what we have characterized as an ongoing decline in dollar holdings and rise in the reserve share of nontraditional currencies in fact reflects the behavior of a handful of large reserve holders. But when we exclude Russia and Switzerland from the COFER aggregate, using data published by their central banks from 2007 to 2021, we find little change in the overall trend. Recent data from the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) point to an ongoing gradual decline in the dollar’s share of allocated foreign reserves of central banks and governments.
COFER data are available beginning 1995 on annual and monthly bases, while quarterly data begin from 1999Q1 onwards. Prior to 1995, annual data are published in the International Reserves appendix of historical IMF Annual Reports. “All others” (yellow in the chart below) are a large group of currencies, whose combined share has soared to 4.2% in Q2, from 2.5% at the end of 2019, the biggest gainer, composed of currencies that are not listed separately in the IMF’s data. Here we hold a magnifying glass over the colorful tangle in the chart above. And what we see is that these other currencies, except for the Chinese RMB, have been gaining share since 2015, while the dollar has been losing share and the euro has been hanging on to its share. Over the past 10 years, the dollar’s share has dropped by about 8 percentage points, from 66% in 2015 to 58.2% in 2024 so far.
