philip r lane : “ multiple reserve currencies and the international monetary system ” panel remarks by mr philip r lane, governor of the central bank of ireland, at the seventh high - level snb - imf conference on the international monetary system, zurich, 10 may 2016. * * * the world is in an important transition phase : the share of emerging economies in global gdp is far higher now than a decade ago. over time, these countries are adopting a more liberal approach to international financial integration, building a larger set of domesticcurrency financial markets that facilitate participation from overseas investors and permitting greater outward flows from the domestic private sector. in turn, the asymmetric configuration of the global financial system that characterised the decade following the asian crisis ( large external surpluses, accumulation of foreign currency reserves, the acquisition of foreign debt assets but the issuance of foreign equity liabilities on the part of emerging economies ) is due for replacement but the exact properties of the new configuration is not yet clear ( lane and milesi - ferretti 2008 ). in terms of the overall level of reserves, we know that traditional factors such as the level of trade openness and the exchange rate regime have been joined by financial factors, such as the size of the domestic financial system, the extent of capital account openness and the scale of foreign currency liabilities in determining the appropriate level of reserves. for instance, obstfeld, shambaugh and taylor ( 2010 ) were prescient in emphasising the size of domestic financial liabilities that could potentially be converted into foreign currency as a driver of reserves, in view of recent developments in various emerging markets and the emphasis in the april 2016 imf world economic outlook on gross capital outflows as an increasingly important driver of the financial account for these economies. in related fashion, the empirical work on the composition of reserves identifies both trade and financial linkages as significant in explaining currency shares : all else equal, a country that trades a lot with the euro and issues a lot of euro - denominated debt will hold more euro reserves, compared to a country that is more closely linked to the us and issues a lot of dollar liabilities. related work includes eichengreen and mathieson ( 2000 ), lane and shambaugh ( 2010 ) and benetrix et al ( 2015 ). the rise of china as a share of global gdp and the internationalisation of the rmb means that the share of the rmb in reserves

where the other side is coming from are more important than ever – especially during times of heated debate. i want to thank all our colleagues for their dedicated and excellent work – and that includes not only the current staff but all those who have been serving here since 1987. and especially i want to thank ms. gudrun moede for her excellent job in running the office and preparing today ’ s event. at the same time, we could not be more thankful for the outstanding partnership with the bank of japan. from the very first day, our team felt more than welcome and i am confident that this will continue into the future. governor kuroda, i would like to thank you and your team in the name of the bundesbank and our tokyo team : it has been and continues to be a privilege to work side by side with you and the team of the bank of japan. we are deeply thankful for the warm welcome, for your support and for your honest, friendly, and effective cooperation. 5. conclusion ladies and gentlemen global economic cooperation has helped us to build a more prosperous society. however, it does have side effects. only by reducing and managing these side effects can we foster global cooperation in the long term. only if we manage to strengthen the cooperative principle can we remain successful. focused global cooperation promises a way forward. we should all put our minds together to decide how this can be best achieved. continued close cooperation between our nations will serve us well. and our office here in tokyo will continue to further that cause. thank you for your attention. 1 brosnan, s. f. & de waal, f. b. ( 2003 ). monkeys reject unequal pay. nature, 425 ( 6955 ) : 297 – 299. 2 brosnan, s. f. et al ( 2010 ). mechanisms underlying responses to inequitable outcomes in chimpanzees, pan 3 / 4 bis central bankers'speeches troglodytes. animal behaviour, 79 ( 6 ) : 1229 – 1237. 3 rodrik, d. ( 2000 ). how far will international economic integration go? journal of economic perspectives, 14 ( 1 ) : 177 – 186. 4 / 4 bis central bankers'speeches