30 September 2012
Ousmène Jacques Mandeng, Public Sector Group, UBS
The latest IMF survey on the currency composition of central bank foreign exchange reserves for Q2 2012 seems to affirm the effect of significant reserve accumulation by the Swiss National Bank (SNB).1 SNB reserve accumulation represented significantly more than total reserve accumulation during Q2 2012; during the last 12 months and 6 months, SNB reserve increases represented about one third of total accumulated foreign exchange reserves. SNB EUR reserves rose by the equivalent of more than twice the estimated total EUR reserves accumulation in Q2 2012 (allocated reserves grossed-up for unallocated reserves). The share of SNB reserves in total reserves increased from 1.0 percent in 2008 to 3.7 percent. In July and August, the SNB maintained strong reserve accumulations and since end-2011 through August 2012, accumulated USD170bn. The SNB has become an increasingly important driver for both level and currency composition of total reserves.
Total reserve currency diversification has stagnated somewhat in Q2 2012. USD reserves, remaining by far the most important reserves, have seen some stabilisation of their share in total reserves but remained well below their pre-crisis levels following an earlier rebound. EUR reserves stabilised somewhat since their steady decline from their Q3 2009 peak. GBP reserves preserved their share while JPY reserves saw a modest increase and extended their post-2008 crisis gains. Other currencies, estimated to include mostly AUD, CAD, NOK, SGD and other emerging Asian currencies have stabilised following a significant increase through 2011 (Table).2
SNB foreign exchange reserves seem to increasingly affect total reserve currency composition. SNB maintains a significantly larger share in EUR reserves compared with total reserves. The share of SNB EUR reserves in total estimated EUR reserves has increased from 1 percent in 2008 to 9 percent in Q2 2012. The SNB has accumulated an amount equivalent to about half of all EUR reserves accumulated during the past 12 months and all EUR reserves in Q2 2012. This has more than compensated for the decline of EUR reserves in emerging markets reserve holdings. The SNB also maintains higher JPY reserves. In Q2 2012, the SNB accumulated the equivalent of two thirds of total accumulated JPY reserves. The SNB has also pursued diversification into other currencies, including DKK (since 1998) and CAD (since 1999) and AUD, SEK, SGD and KRW albeit at a somewhat slower pace. The SNB accumulated more than 40 percent since end-2011 and more than half in Q2 of the estimated total other currencies reserves.
1 IMF COFER 28 September 2012. All data through Q2 2012 unless otherwise stated.
2 COFER does not reveal the composition of other currencies.