From FT Alphaville:
Ok, so this has been an ongoing decline, as Barry Eichengreen and others have explained in great detail.Let's Gdansk.
But perhaps Brexit is finishing the process? Of sterling’s crumbling… well, crumbled… reserve currency status, that is.
That’s certainly Deutsche’s Robin Winkler’s argument,with our emphasis:
To the extent that reserves serve as backstops against currency stress, rather than as sovereign wealth, the pound’s diminishing role in international capital flows post-Brexit should permanently reduce its reserve status. Central banks stock currencies to which their own currencies are most susceptible via trade and capital flows.Here’s the most recent why:
Academic work shows that global reserve allocations closely match the relative sizes of the major currency blocs.* These are calculated as the betas of each global currency to the reserve currencies—USD, EUR, and GBP—multiplied by the relative sizes of the respective economies...MUCH MORE