Canadian Reserves Are Illustrative of a Number of Points

Canada reports its international reserves on a weekly basis. It just reported its reserves as of Sept 13. They stood at $57.9 bln, up about $635 mln in the past week, which appear largely to be a reflection of valuation. The swings in currency valuation often are overlooked when talking about changes in reserves. Another interesting point is that although the US absorbs the vast majority of Canada's exports, less than half of Canada's reserves are in US dollars. Specifically, Canada reports that its US dollar holdings are worth about $25.6 bln and other currencies account for $20.4 bln, with special drawing rights amounting to another $9.3 bln and its reserve position and gold holdings are worth another $2.55 bln. The point is that Canada had no problem diversifying reserves. Reserves are concentrated in about a dozen countries. The lack of a clear alternative to the dollar may very well apply to them, but for the bulk of the remaining countries, Canada shows the way. The thing that those countries lack seems to be will not alternatives. Lastly, reporting the currency composition of one's reserves is part of the best practices of IMF members. China remains the chief exception.