The latest COFER data doesn’t show much change in the dollar’s share of global reserves: the dollar accounted for 64% of the reserves of countries that report data to the IMF at the end of 2008, exactly the same share as at the end of 2007. The dollar’s share of the reserves of advanced economies rose just bit, going from 66.9% at the end of 2007 to 68.1% at the end of 2008. And the dollar’s share of reporting emerging economies — a set that importantly excludes China — fell from 61.3% to 59.7% over the course of 2008.
Those small changes though aren’t the real story. The real story is that global reserve growth — and thus dollar reserve growth — has slowed. Look at the following chart. To estimate the stock of dollar reserves, I assumed that the countries that do not report data to the IMF held a constant 65% of their reserves in dollars (this is effectively an assumption about the dollar share of China’s reserves*). And to keep things simple, I didn’t add in the growth in the non-reserve foreign assets of China’s central bank or the growth in non-reserve foreign assets of the Saudi Monetary Agency. This is very easily replicable graph.
The obvious implication of the recent downturn in total reserve holdings — and the $180 billion fall in q4 wasn’t driven by currency moves — is that the pace of growth in the world’s dollar reserves has slowed dramatically.
In the fourth quarter, the IMF data shows a $110 billion fall in the dollar holdings of countries that report detailed data to the IMF. That all came from emerging economies — who had to sell their reserves to finance massive capital outflows. The reserves of the countries that don’t report data to the IMF also fell by $55 billion. They likely reduced their dollar holdings proportionately.