REDUCED RESERVES

In 2000, the percentage of foreign exchange reserves held by governments in dollars was 71%. Today it’s 60%. Oddly, Euro/yen/pound holdings are virtually unchanged at 31%. China accounts for 25% of the shift from the dollar, largely due to Russia. Most of the shift is due to rising holdings of Australian, Canadian, South Korean, and Swedish currency, all well-managed nations with sound, stable policies and floating exchange rates. Benign.