Report
The end of the rise in global foreign-exchange reserves entails major effects
Glob al foreign-exchange reserves have no longer been increasing since 2014 under the effect of: The decline in foreign-exchange reserves in China because of the decline in its external surplus and its capital outflows; The decline in foreign-exchange reserves in oil-exporting countries due to the moderate level of oil prices; The slow growth in foreign-exchange reserves in other emerging countries due to the disappearance of their external surpluses. The stagnation of global foreign-exchange reserves entails potentially major effects: It has stopped fuelling the bond markets of countries with reserve currencies, which can be expected to eventually drive up long-term interest rates; It puts an end to the financing of US purchases of foreign shares via sales of Treasuries to the rest of the world (the United States’ role as “the world’s bankerâ€); Foreign-exchange reserves no longer contribute to the increase in global liquidity, which ought to be negative for all financial markets.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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