Euro still the world's second reserve currency: ECB

FRANKFURT: Europe's single currency retained its role as the world's second largest reserve money after the dollar last year despite the Greek debt crisis, the European Central Bank said Friday.

An ECB report said that "the international role of the euro remained broadly stable during 2010 when compared with other major international currencies."

It said that "when adjusted for valuation effects, the share of euro-denominated instruments increased by 0.3 percentage points in global holdings of foreign exchange reserves and by around one percentage point in the turnover on foreign exchange markets."

The euro's share in the stock of global foreign exchange reserves climbed to 26.3 percent at the end of 2010, with a value of around 5.12 trillion dollars, the ECB said.

In terms of internationally issued debt securities, the amount denominated in euros fell by around 2.0 percentage points to 27.4 percent, in line with fluctuations seen in recent years, it added.

The total value of such securities was calculated at 10.57 trillion dollars.

ECB president Jean-Claude Trichet noted that "the stability-oriented monetary policy of the ECB and the Eurosystem continued to underpin the international use of the euro as a credible store of value."

The report was released as Greece headed towards the first default in the eurozone's history after a summit meeting reached agreement with banks to save the euro from an epic debt crisis.

Considering currencies from emerging economies, the ECB said: "The international role of currencies of emerging (and developing) markets is less prominent than the role these countries are assuming in the global economy."

Although China is now the world's second biggest economy, "it is unclear over what time horizon the renminbi (yuan) will emerge as a key reserve currency," it said.

Because a range of Chinese capital controls remains in effect, "the potential for the renminbi to increase its role as an international currency appears relatively limited for the time being," the ECB said.

Copyright AFP (Agence France-Presse), 2011