as an international currency continues to strengthen. widespread acceptability of the euro has of course been beneficial to euro area countries. countries running current account deficits which previously needed foreign currency can now be financed with europe ’ s own currency. a situation that was previously prevailing only in the united states. the dollar ’ s dominance is very visible in commodities markets. a good example is of course oil but many other commodities, in fact most, are currently invoiced in dollars. it is difficult to foresee what could change the situation in the near - term due to inertia. but some observers have pointed out that the euro might become an invoicing currency in a fast developing natural gas market. be it as it may, russia is the world ’ s largest gas exporter and an important gas supplier for europe. the eu is currently world ’ s second largest energy market and will remain russia ’ s most important energy export market. as regards foreign exchange reserves, it is well known that the choice of the currency composition in foreign exchange reserves depends on several factors such as market liquidity, country ’ s exchange rate regime and diversification strategies. the recent ecb study and data from the imf suggest that the share of the euro in global foreign exchange reserves have reached over 25 per cent. the share has gradually increased over the years, but recently stabilized. when interpreting these results one has to keep in mind that full data on the currency breakdown of reserves is not available. there are still many countries that do not disclose such data to the imf. therefore as regards foreign reserves the picture is somewhat blurred which is a fruitful ground for many kinds of speculative assessments. this is clearly an unsatisfactory situation and more transparency is urgently needed. there is evidence that some large asian reserve holders with tightly managed exchange rates against the us dollar do not report their currency composition to the imf. because of the anchor currency ( the us dollar ) there are good reasons to expect that these countries have a certain bias towards the dollar. the euro ’ s international role is geographically concentrated in regions that are close to the euro area. most eu neighboring countries that disclose the currency composition of their foreign exchange reserves predominantly hold euro. also in this context it is interesting to note that the central bank of russia recently increased the euro weight in their currency basket to 45 %. when discussing the role of the international currencies, we should not underestimate the importance of sovereign wealth funds. these funds have recently

markedly changed the landscape of international finance. these funds are by no means small. currently the total assets of swfs are estimated to be 2 - 3 trillion us dollars which compares roughly to around 5 trillion us dollars accumulated as traditional international reserves. swfs are an important and growing “ player ” in the international monetary and financial system. the potential growth of swfs is significant. their aggregate size could reach 10 – 15 trillion us dollars by 2015. swfs typically employ a set of investment strategies which include investing in foreign assets. is this a problem? many believe that such funds could create new risks for the international financial system. in their view, the sheer size and potential growth of these funds is a concern. they consider that a major portfolio shift from dollar - denominated assets to those denominated in the euro or in other currencies could significantly affect exchange rates and risk market stability. perhaps more worrying still, the growth of these funds may give rise to protectionist pressures. to counterbalance these worries the swfs can be very beneficial in times of financial market turmoil. the ability to ride out business cycles with a long - term view of their investments ( no leverage ) brings diversity to global markets. it goes without saying that we do not know much of swfs investment strategies to say nothing of their currency distribution. however, norwegian government pension fund has been a front - runner as regards the transparency of the fund ’ s investment strategy. last year ( sept. ) their assets denominated in euro accounted for almost 40 % of the fund ’ s total assets whereas the share of us dollar - denominated assets was just above 30 %. as regards international debt markets, the euro accounted for a substantial share of the outstanding stock of international debt securities, both in bonds and notes as well as money market instruments. in fact, euro - denominated debt was roughly one third of total debt issued outside euro area. based on a recent bis survey ( 2007 ) the euro was the second most traded currency in the foreign exchange markets after the us dollar and ahead of japanese yen. the euro was on one side in 37 % of all foreign exchange transactions worldwide. euro / dollar currency pair represented 74 % of all transactions involving the euro. also in the international loan and deposit market the euro plays an important role. while the share of the euro in the international loan markets has stabilized to around 21 %, their volume has increased markedly. in particular, emerging europe is playing an increasing role in