Euro hasn't gained as reserve currency for three years

BIS Says Dollar Still
Top Reserve Currency

From Reuters
via Khaleej Times, Dubai
Saturday, November 4, 2006

BERLIN -- The US dollar has a big lead over the euro as the world’s top reserve currency, but the British pound is now much more widely held than the Japanese yen, according to a Bank for International Settlements report quoted in a German magazine on Saturday.

Der Spiegel quoted a new BIS study which found that the euro was not yet in a position to challenge the dollar as the key reserve currency, despite speculation that the greenback had been losing ground.

"In terms of size, quality of credit, and liquidity, dollar financial markets still surpass the euro markets," it said.

Mounting debt in the United States and reports that central banks had been restructuring their reserves to the detriment of the dollar have prompted some forecasts that the European single currency could be on course to take the No. 1 spot.

But the report said that while the euro's share in currency reserves steadily increased up to 2003, it has not done so since then. In 2006, the single currency's share remains well below the 66 percent share taken up by the dollar, the study added.

The BIS report said that since the end of the 1980s the share of yen reserves among central banks has halved to 5 percent, while Britain's strong growth in the period had pushed the pound's share up to 12 percent from 5 percent, it added.  

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