Global use of the euro rises in 2018, but dollar continues to dominate – ECB – The Economic Journal


The euro gained ground against the dollar as a currency used in government reserves globally, recovering from record lows at a time when US-imposed sanctions discourage some countries' choice for the US currency.

According to a report released today by the European Central Bank (ECB), despite a slow diversification of other currencies in recent years, notably – and more recently – the Chinese yuan, the dollar remains by far the currency trade, loans and reserves.

In the report on the 18th annual review of the international role of the euro, which assesses the evolution of the use of this currency by non-euro area residents, the ECB notes that the share of the single European currency in reserves held by central banks and the world increased 1.2 percentage points during the year 2018, to 20.7%, reversing the downward trend that had been registering.

Meanwhile, the dollar's share fell slightly to 61.7%, seven percentage points below the highest level reached before the global financial crisis of 2007-2009.

Among the factors identified as having affected the use of the US currency are the sale of dollars by several countries to support their own currency and the financial sanctions imposed by the US, for example, Russia, which led to the flight of some 'holdings 'for other debts to avoid American restrictions.

Another reason cited by the ECB as being the basis of the decline in dollar reserves is the sales of assets in dollars by emerging countries in an attempt to avoid the devaluation of their respective currencies.



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