According to the IMF, Russia held almost a third of the world’s yuan reserves in December 2021

Russia held almost a third of the world’s renminbi (yuan) in reserves in December 2021 amid the decline in the dollar’s share of global foreign exchange reserves.

This was revealed by the International Monetary Fund in a blog post title, “Dollar Dominance and the Rise of Non-Traditional Reserve Currencies”.

The IMF has indicated that central banks no longer hold the greenback in their reserves as they did before.

What the IMF says

  • The IMF said, “The dollar’s share of global foreign exchange reserves fell below 59% in the last quarter of last year, extending a two-decade decline, according to IMF data on the currency composition of official foreign reserves. “
  • The Bank of Israel recently presented a new strategy for its more than $200 billion in reserves, demonstrating the broader change in the composition of foreign exchange reserves, according to the IMF. It will reduce the share of the US dollar in the portfolio starting this year and increase allocations to the Australian dollar, Canadian dollar, Chinese yuan and Japanese yen.
  • The IMF also noted that the decline in the US dollar reserve has not been matched by increases in the share of the euro, yen and pound in the global reserve currency market.
  • The IMF added that “An update to data referenced in the working paper shows that at the end of last year, a single country – Russia – held almost a third of the world’s renminbi reserves.”
  • A more reasonable argument, according to the Washington-based lender, is that these non-traditional reserve currencies are issued by countries with open capital accounts and a history of good and stable policies.
  • The bank added that “Important characteristics of reserve currency issuers include not only economic weight and financial depth, but also transparent and predictable policies. In other words, economic stability and political decisions are important for international acceptance.

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