Debt crisis hits euro's reserve currency role

Now Reading:

Debt crisis hits euro's reserve currency role

Text size Aa Aa

The euro has become less popular as the region’s sovereign debt crisis made investors wary of the single European currency.

As a result countries around the world cut back on their euro holdings as a percentage of their foreign exchange reserves last year.

That information came in an annual review from the European Central Bank. It said the currency’s share of global central bank foreign exchange reserves declined by 1.2 percent to 23.9 percent.

This made 2012 the third year in a row the euro has declined in popularity as a reserve currency, putting its share at the lowest level since 2000.

According to the International Monetary Fund that trend continued in the first three months of this year.

The ECB was not worried about the drop. It said: “The euro continued in 2012 to perform its function as the second-most important reserve currency in the world.”

There was also little change in the popularity of the euro on foreign exchange trading.