COMPETITIVE INTERNATIONAL LIQUIDITY

Competitive International Liquidity

--Dr.Debesh Bhowmik

We have noticed a fundamental change in the international liquidity position.China ,now commands a largest share of international liquidity.In terms of SDR, its foreign exchange reserves reached at the unprecedented amount followed by Japan, Euro Area,and USA.Total reserves of China stood at 2,168,585.894 million SDR in comparison to 799306.721 million SDR of Japan,228502.488 million SDR of EU and 96680.191 million SDR in 2012 where China, EU, USA faced increasing trends of reserves but fell in Japan in 2012.The similar trends were seen in foreign exchange reserves in  terms of SDR during 2009-2012.All countries’ reserves in gold in fine troy ounces were more or less unchanged and it did not affect the international liquidity because there is no gold convertibility or gold exchange rate system in the world at present. But in the IMF reserves position, Euro Area ranks the first position followed by USA, Japan and China where the European and American dominance in IMF is clear even now.  Also, we found that in case of SDR reserves, Euro Area holds the largest share followed by USA, Japan and China. It is understood that only in 2012,Chinese reserves in the IMF marginally fell and Japanese reserves position in all respects increased but decreased in SDR holdings and dwindled foreign exchange reserves in terms of SDR in 2012.Therefore,Chinese and Japanese control over the international liquidity in terms of SDR is the new situation that gave USA dominance in trouble. The unit of account of reserves in terms of SDR is questionable because world payments mechanism is largely maintained through the exchange of US Dollar. Are we transforming into SDR system from US Dollar in clearing international liquidity? So,we have to wait for some time for the outcome of reforming international monetary system.   

Japan (Million )

		2009	2010	2011	2012
Total Reserves	SDRs	652,926.207	690,126.788	820,373.250	799,306.721
Total Reserves Minus Gold	SDRs	652,065.122	689,265.703	819,512.164	798,445.635
Gold	Fine Troy Ounces	24.602	24.602	24.602	24.602
Reserve Position in the Fund	SDRs	2,751.248	2,992.343	11,189.153	8,887.154
SDR Holdings	SDRs	13,375.008	13,392.962	12,860.975	12,954.624
Foreign Exchange	SDRs	635,938.865	672,880.398	795,462.036	776,603.857

USA(million)

		2009	2010	2011	2012
Total Reserves	SDRs	85,518.866	87,976.635	98,330.559	99,680.191
Total Reserves Minus Gold	SDRs	76,366.405	78,824.174	89,178.098	90,527.729
Gold	Fine Troy Ounces	261.499	261.499	261.499	261.499
Reserve Position in the Fund	SDRs	7,262.528	8,111.627	19,592.583	22,227.012
SDR Holdings	SDRs	36,878.209	36,898.149	35,794.962	35,818.621
Foreign Exchange	SDRs	32,225.668	33,814.398	33,790.553	32,482.095

Euro Area(million)

		2009	2010	2011	2012
Total Reserves	SDRs	192,559.165	207,102.523	218,426.206	228,502.488
Total Reserves Minus Gold	SDRs	180,407.869	194,958.850	206,286.599	216,368.233
Gold	Fine Troy Ounces	347.180	346.962	346.846	346.693
Reserve Position in the Fund	SDRs	9,688.892	13,659.703	25,220.692	27,387.294
SDR Holdings	SDRs	46,706.536	46,802.748	45,493.920	45,279.005
Foreign Exchange	SDRs	124,011.342	134,495.360	135,571.144	143,167.107

China(million)

		2009	2010	2011	2012
Total Reserves	SDRs	1,542,335.026	1,862,240.323	2,087,326.394	2,168,585.894
Total Reserves Minus Gold	SDRs	1,541,148.876	1,861,054.173	2,086,140.244	2,167,399.744
Gold	Fine Troy Ounces	33.890	33.890	33.890	33.890
Reserve Position in the Fund	SDRs	2,795.057	4,153.587	6,373.438	5,318.986
SDR Holdings	SDRs	7,979.644	8,015.753	7,722.150	7,388.758
Foreign Exchange	SDRs	1,530,374.175	1,848,884.833	2,072,044.657	2,154,692.001

Source-IMF.