Euro Faces Decline in Global Reserve Currency Status as Foreign Holdings Decrease
The European Central Bank (ECB) reported that the euro’s share of foreign exchange reserves dropped by one percentage point to 20% in 2023, signaling a threat to its status as a reserve currency.
This decline coincides with increases in the U.S. dollar and Japanese yen reserves, which rose to 58.4% and 5.7%, respectively. The report highlights the trend of global reserve portfolios diversifying into nontraditional currencies like the Australian dollar and Chinese renminbi. Despite the decline in foreign exchange holdings, the euro’s role in global payments within the eurozone remained stable.
The ECB also noted that while Russia has promoted the ruble, the Chinese renminbi is emerging as a significant regional reserve currency, evidenced by India’s use of renminbi for paying Russian crude oil. Additionally, the report discusses the potential influence of crypto assets on global payments and some countries’ efforts to introduce crypto-based systems.
Clever Robot News Desk 14th June 2024
