The Park Place Economist


Since the Asian financial crisis in 1997, the world has seen foreign currency reserves holdings in Asian countries skyrocket. China and India rank as second and fifth in foreign currency reserve holdings in the world, respectively. Together, the Asian emerging countries comprise approximately 40% of all world foreign currency holdings (Aizenman, 2003). The amount of reserves being held is one of the highest in history. Because of this, it is interesting to examine the factors that are driving this increase in reserves.