CHINA IS SITTING ON THE THRONE?
In a world where cash is king, China is sitting on the throne.
China has more money sitting in its foreign exchange reserves than countries like France, Germany, U.K. and Brazil produced last year from its entire economy.
China’s foreign currency reserves swelled to a record high of $3.201 trillion at the end of September, the country’s Central Bank said on Friday. Country’s hold cash reserves as a means to make their sovereign bonds safer and therefore more attractive to investors. They also use forex reserves as rainy day funds to help countries during times of national or international economic crises.
China’s reserves are by far the largest in the world. Only Japan comes close with its reported $1.13 trillion in cash. Although China’s forex reserve is mostly made up of dollars, China also has been diversifying into euros, gold and sovereign debt of other countries like Australia and Japan as well.
China’s forex position is more than half of its 2010 GDP of $5.87 trillion, according to the International Monetary Fund.