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Canadian and Australian Dollars Declared Reserve Currencies by the International Monetary Fund
Last week, the IMF declared the Canadian and Australian currencies to be reserve currencies, and asked the central banks of nations holding them to include them in the statistics they supply to the IMF enumerating their central bank foreign exchange reserves. They join the U.S. dollar, Euro, Pound, Yen, and Swiss Franc as reserve currencies in IMF accounting. This action points to the fact that many central banks hold Canadian and Australian dollars, and that the commodities that both countries produce are in wide demand to fuel world growth. Both currencies are important to international trade, and have become significant part of central bank currency holdings.
An interesting side note, the Chinese Renminbi (Yuan), Korean Won, and Singapore Dollar are also held by a few central banks, but are not yet considered reserve currencies by the IMF.
The U.S. Dollar Falls as a Percentage of Declared Central Bank Reserves
The U.S. dollar represented 71.5 percent of the reserves declared to the IMF in 2001, and currently represents only 62 percent of the reserves declared. Global central banks have reduced their holdings of dollars and replaced them with other currencies as the U.S. balance sheet has deteriorated, and U.S. issuances of debt have grown. This appears to be an innocuous fact, but it represents significant proof that central banks no longer have the faith in the wise behavior of the U.S. political class that they once did.
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