Topic: Diversification in Global reserves. - page 4. (Read 639 times)

Global reserves and the makeup that different countries are comfortable with holding are changing all of that time. If your currency enters the favored basket of currencies, it generally means it's more trusted which usually stems from level headed governance that are not prone to shock decisions. Take China for example, it is stuck in a bit of a paradox - it wishes it's currency was in higher demand, but is also battling not to have it freely floated because it would take away some financial maneuvering by the Chinese central bank. If their currency raises too much, it's exports become too expensive and then other countries start looking elsewhere for products, but if its too low then it is expensive for them to import from other countries. The erratic nature of the Chinese government also makes other countries uncomfortable with holding too much of their currency.

For one, it has not been a case of steady decline, there has been some points in the past 50 years where the value of the USD has increased but it has mostly suffered from inflation over the years but still a bit of a way to go to bring worth zero.
Those researves are also not solely held in USD there are several precious stones and other assets Wich make it up.

Asbabgolbak reserve currency, it's a long short. It is possible that Bitcoin gets used experimentally by one of two countries but we are a very long way from a full scale global adoption as a reserve currency if ever.

I would not say cryptocurrency because in cryptocurrency there come ALTs and BTC and I can not vouch for the ALTs as investments for diversification at the global reserve level. Because there are alts that are just shit tokens and don't really solve anything then there are no means to hold them and some are totally built up on manipulation (doge-like). Some are centralized but some are decentralized too but still, they lack the scarcity and security issues.

The solution to all is BTC, we can use BTC for diversification purposes, So yeah BTC does stand a chance in share of the global reserves.

BTC cannot be manipulated at a level at which USD can be manipulated and besides that after reading some replies, some members were saying BTC is better but USD is still in the hype and was comparing ((kryptqnick) BTC with USD. For those I have only one question, which is:

Which pair with BTC has the most trades till now?

The answer is USDT which has crossed 1 billion USDT and tell me USDT is pegged with? it is pegged with the US dollar, which means indirectly BTC is also promoting the US dollar and they are printing a hell lot of dollars.

Point is, People are looking to diversify their funds, but they don't know they are also depending on US dollars to some extent but they can avoid it, by trading in some other pair of course.

While Bitcoin may be the best answer to your question, countries that intend to diversify their reserves will mainly consider assets that they can fully control and monitor. In the European example, the best solution to reduce dependence on the dollar is to strengthen the position of the euro and encourage everyone to use it instead of the dollar. At the same time, this is not an easy step, given that the dollar is the approved currency in international exchanges, and it will not be easy to delink from the dollar, especially since Europe is in an economic and strategic alliance with the United States, and this will have serious consequences on several aspects.

The answer to your query lies in your position itself, like the title says, Diversification in Global Reserves. Because nations have been so reliant on US dollars since 1971 and continue to be so. Even many developing countries took huge loans with huge interest in US dollars from the IMF. By doing that, they have no choice other than to follow them or do whatever the IMF asks them to do.

Therefore, people, nations, and governments are looking for other assets that can be used for reserves because gold is obviously the number one thing, but many countries lack it while the US doesn't.

Even though there is a huge tax on taking gold from one place to another, sometimes they don't even let anyone take gold from one place to another. The transportation of gold is very difficult. But in comparison to that, BTC can easily be transacted, and it has the factor of scarcity, while gold doesn't have that. And with BTC, there are other 20k tokens and coins. Which also diversified the portfolio and provided people with better options instead of just relying on the US dollar.

The US inflation has been pretty stable at a fairly low rate, something policymakers consider acceptable. And the global reserves decline isn't really showing any kind of trend, as the USD is still at the top without any close contenders, and it's been fluctuating somewhat over the years while keeping this generally strong dominance.
I think using some BTC as a reserve can be a good thing, but it's also a matter of whether other countries will be willing to trade in it internationally (and with the negative IMF's position it's unlikely) it can kind of become dead weight. Foreign reserves need to be currencies that other countries are very willing to use for international trade, loans, and other similar things. I don't think Bitcoin has reached that level of acceptance yet.

I do not think this information is accurate. The dollar has decreased in the share of global reserves for several reasons that may not be related to inflation, including China selling a lot of US treasury bonds to strengthen its currencies, or the movements of the Japanese Central Bank, or more countries diversifying their investment portfolio, or deals selling oil for non-dollar terms and their impact. On the price and many reasons that may not be directly related to inflation.

The dollar's status as a global reserve currency will not change unless a world war or major changes occur, which will not happen in the next few years.

cryptocurrency No, Bitcoin for now No, but there is a good chance that Bitcoin will be a currency for international trade in the future.

Proper diversification of the world's reserves is very important for the successful work of any state. Keeping everything in one basket is, as practice shows, a wrong decision. But it is also impossible to bet only on bitcoin because of sharp fluctuations in its price. Gold, silver and other similar assets change in price not so often

I didn't know that the dollar had lost its value by 98%. But if I'm not mistaken the pound has lost a lot of its value against the US dollar, in 1940 the pound had an exchange rate of $3 against the US dollar, and now it only has a third of that value.

I do not agree if bitcoin is made a state reserve because its circulation in the public will be greatly reduced and the vision of bitcoin as a currency will be increasingly difficult to realize. I would prefer if bitcoin was used as an alternative currency for cross-border transactions.

There's indeed going to be diversification in global reserved asset with bitcoin in cryptocurrency, the only difference is that the people cannot compare this with the ones happening with centralized institutions and government whereby they made use of the physical asset and natural resources, bitcoin in cryptocurrency is fast gaining more attention in these global economy and served as a reserve digital currency and global asset individual persons can invest on, hold and have a secured future through it investment and their financial economy will have a total turnaround, what the people have is bitcoin while the government is gold, fiat and other physical investment assets.

With all around the world leading the changes being a millennial and some people wanting crypto, it wouldn't be surprising that Bitcoin would be able to keep up with Gold. It's all about the demand and how much it could bring to the economy and become the leading asset for people, then it would probably continue to increase in price as well.

In my opinion, it would be very difficult to consider crypto currency as a global reserve asset, with its high fluctuation nature, this will make the stabilization of the value of the asset uncontrollable, secondly, crypto has a cycle and is quite serious with global economic sentiment which can influence it.

It is possible to diversify it at a certain time, such as the preparation of the bitcoin bull market, countries that do this will definitely get more value and help the growth of the value of their money with bitcoin, the only problem is that they have to wait to get it, while it can be used as an asset whose activity is quite fast in global transactions, such as paying debt or whatever it will be very difficult for that. And unless they do it quickly to transact to avoid a decrease in value.

You need to understand why do we need to keep a global reserve and why it's important.

A country keeps its reserves to do cross border transactions. If india wants to trade with china then they will do that with global reserve. They will not use their native currency if there isn't any agreement between those two nations because it is not widely acceptable. If india accepts Chinese native currencies they will not be able to use that to trade with other country. They don't keep their global reserve as savings. This money keeps circulating and that is why we saw some countries losing their reserves when other gaining it. If inflation getting higher they will still keep USD as their global reserve due to its acceptance. Some countries wanted to change that but USD dominance is still very strong.
 

The Answer would actually be No if actually the global reserve holds only dollars, but I can tell you that most of these nations do not have there reserves only in the dollar currency even the US who owns the dollar diversified them into gold and other precious metals but with Gold been the highest hold, so if it is so for every reserve then the hit wouldn’t be felt that much.


I wouldn’t say we the word cryptocurrency because I don’t want to generalize because I think aside bitcoin no other coin is worth of been used for investment purposes talk more of been a reserve. Bitcoin could have been a perfect answer with the way that it doesn’t have any backing of a countries currency and it is universal. But a reserve is is something that you can easily use in exchange during international trading with bitcoin volatilities and probably like of manipulation many of these countries wouldn’t want to accept it. And a country holding junk of it in reserve might have to find another commodity or currency to be use for trading everytime just to beat the volatility of the bitcoin.

A bit off point I would say if it is an individual looking for long term investment then bitcoin is the perfect solution for that

The fiat currency as we all know is subject to inflation. Needless to say, a lot of economies have gone down due to it, but today, we're going to be talking about the US dollar.
 
The US dollar has lost 98% of its purchasing power since 1971 and has gone through an 8% decline in its shares of global reserves in 2021. Now the thing is, if the USD continues to face inflation this much, do you think the Global reserve would be worth anything much in the future?
Lately, other countries have begun to carry out trade in currencies aside from USD due to US sanctions and other reasons including trade war with China and fed hikes to reduce inflation.

I'm April, Emmanuel Macron, the French president said that Europe must reduce its dependence on the US dollar to keep its strategic autonomy and avoid becoming vassals to America.
Although dollars play a huge role in the world financial system and cannot be replicated by other countries, it doesn't still change the fact that it's declining and we may need alternatives to occupy shares in the reserves.

Gold seems like a fine option, considering how its purchasing power, remains more stable over time, but do you think cryptocurrency stands a chance?

 Now don't get me wrong, we all know and understand that Bitcoin in particular is decentralized, hence making it an alternative to money. Anyway, I intentionally used crypto and not Bitcoin since there are centralized coins that can be controlled by the Fed like USDC & USDT ( another thing is if they hold value as much as gold to be included).

So, do you think cryptocurrency stands a chance in share of the global reserves, now that countries are opened to diversification through assets?