Reserve Currencies in an Evolving International Monetary System

Despite major structural shifts in the international monetary system over past six decades, US dollar remains dominant reserve currency. Using a newly compiled database of individual economies’ holdings by currency, this paper finds that financial links have been an increasingly important driver currency configurations since global crisis, particularly for emerging market and developing economies. The also rise inertial effects, implying dominance is likely to endure. But historical precedents sudden changes suggest new developments, such as emergence digital currencies payments ecosystems, could accelerate transition landscape currencies.