Thread by @Brad_Setser

Perhaps the most boring chart in the world

The shares of the major currencies in global reserves, as reported to the IMF.

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The dollar's weight in global reserves is roughly 3 times the United States weight in the global economy (maybe a bit less0; the euro's weight is close to its weight in the global economy -- and China still punches way below its weight, for obvious reasons!

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A far more interesting chart showing global reserves --

The big, interesting important story isn't shifts in share ... but the huge increase in reserve holdings from 02 to 14, and the subsequent reduction in the pace of accumulation.

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A technically demanding global reserves chart -- one showing actual flows (purchases + retained interest income) by currency.

The bond market adjustment complicates everything; I don't yet have a good bond market adjustment for the euro.

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China's reserve sales in 15-16 obviously figure heavily in that chart ...

and there was a quite large pickup in reserve accumulation in 2020-21 that we now tend to forget.

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And some of the most interesting stories told by the reserves data have nothing to do with China --

For example, EM Asia sold a lot of reserves last summer and fall, in what I think was a successful defense against an overshot of their currencies when oil was high!

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And, as I have noted many times and in many different ways, looking only at formal reserves misses much of the picture these days -- China has as much money in state banks, its policy banks and state investment funds as it holds in its formal reserves ...

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So there are stories to tell that don't hinge on creatively graphing these two lines ...

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