Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 37

THE RISK
OBSERVATORY

HUGUES PIROTTE
Solvay BS, ULB
FinMetrics

A quick review
on international
currencies...

The	
  Risk	
  Observatory	
  
by	
  Hugues	
  Pirotte,	
  Prof.	
  @Solvay	
  BS,	
  ULB	
  

written by Blinder (1996) , an international curFigure 1, here below, based on the Composition of
A	
  qAsrency
uick	
  
review	
  on	
  international	
  
currencies...	
  	
  
(1) constitutes a preponderant share of the offiOfficial Foreign Currency Reserves (COFER) data of

80.00

70.00

USD
60.00

50.00

40.00

30.00

EUR

20.00

DEM
10.00

ECU
FRF

0.00

JPY
GBP
Others
CAD AUD
CNY
CHF

- NOV / DEC /
N°99

-
LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE

cial reserves of central
banks, (2) is extensively used
the IMF, shows the state and evolution of the use
1
As	
  written	
  by	
  Blinder	
  (1996)
,	
  an	
  international	
  currency	
  (1)	
  constitutes	
  a	
  preponderant	
  share	
  of	
  the	
  official	
  reserves	
  
as hand-to-hand
international
currencies
in foreign reserves
at
currency inused	
  
foreign
(3) currency	
  ofin	
  
of	
   central	
  
banks,	
   (2)	
   is	
   extensively	
  
as	
   countries,
hand--‐to--‐hand	
  
foreign	
   countries,	
  
(3)	
   denominates	
  
a	
  
that
time.
Themain	
  
decline
of the
U.S. dollar is somewhat
denominates
a of	
  
disproportionate
share
of(4)	
  
international
disproportionate	
  
share	
  
international	
   trade	
  
and	
  
has	
   a	
   dominant	
  
role	
  
as	
   the	
  
choice	
  
in	
   international	
  
perceivable since 2000 but slow. The presence of the
trade
and	
  (4) has a dominant role as the main choice in
financial	
  
markets.	
  
	
  
dollar is thrice that of the Euro. The chart gives an
international financial markets.
In	
   1996,	
   the	
   fact	
   that	
   the	
   U.S.	
   dollar	
   might	
   see	
   its	
   role	
   decline	
   over	
   the	
  
following	
  
years	
   was	
   already	
  
fashionable	
  
idea
of a substitution
effecta	
  between
them, as they
question	
  
that	
  the
time.	
  
The	
  
ECU	
  
had	
  
been	
  
conceived	
  
1979	
  
accounting	
  
unit	
  
and	
   was	
   used	
  
in	
   some	
  
are the
two main
currencies
combining
to more than
Inat	
  
1996,
fact
that
the
U.S.
dollar
might in	
  
see
its as	
   an	
   internal	
  
international	
  
financial	
  
transactions,	
  
not	
   to	
  
be	
   linked	
  
talready
o	
   only	
   one	
  
European	
  
currency.	
   Tand
he	
   nsince
ame	
   "Euro"	
  
was	
  
80%
of the reserves,
shares
are provided in
role decline
over
the following
years
was
a particular	
  
st
defined	
  in	
  1995,	
  being	
  introduced	
  on	
  January	
  1 ,	
  1999.	
  All	
  countries	
  entering	
  EU	
  after	
  1993	
  had	
  pledged	
  to	
  adopt	
  
relative terms here. Figure 2 provides the evolution in
fashionable question at that time. The ECU had been
the	
  Euro,	
  with	
  the	
  case	
  of	
  Sweden	
  reversing	
  this	
  decision	
  with	
  a	
  referendum	
  in	
  2003.	
  	
  
absolute values for both currencies and shows that
conceived
in
1979
as
an
internal
accounting
unit
and
	
  
this substitution
effect happens
in aIMF,	
  
context with an
was
used
in some
international
financialof	
  transacFigure	
   1,	
  
here	
  
below,	
  
based	
  
on	
   the	
   Composition	
  
Official	
   Foreign	
   Currency	
  
Reserves	
   (COFER)	
  
data	
   of	
   the	
  
ever-increasing amount of reserves.
tions, not to be linked to only one particular European
shows	
  the	
  state	
  and	
  evolution	
  of	
  the	
  use	
  of	
  international	
  currencies	
  in	
  foreign	
  reserves	
  at	
  that	
  time.	
  The	
  decline	
  of	
  
The name
"Euro" was
defined
the	
  U.S.	
  currency.
dollar	
  is	
  somewhat	
  
perceivable	
  
since	
  
2000	
  bin
ut	
  1995,
slow.	
  Tbeing
he	
  presence	
  of	
  the	
  dollar	
  is	
  thrice	
  that	
  of	
  the	
  Euro.	
  The	
  
chart	
  gives	
  an	
  idea	
  of	
  a	
  substitution	
  effect	
  between	
  them,	
  as	
  they	
  are	
  the	
  two	
  main	
  currencies	
  combining	
  to	
  more	
  
introduced on January 1st, 1999. All countries entering
than	
   80%	
  
the	
   1993
reserves,	
  
since	
   shares	
  
are	
  
provided	
  
in	
   relative	
  
EUof	
  
after
hadand	
  
pledged
to adopt
the
Euro, with
the terms	
   here.	
   Figure	
   2	
   provides	
   the	
   evolution	
   in	
  
absolute	
  
values	
  
for	
   both	
  reversing
currencies	
  this
and	
  decision
shows	
   that	
  
substitution	
   effect	
   happens	
   in	
   a	
   context	
   with	
   an	
   ever--‐
case
of Sweden
withthis	
  
a referenincreasing	
  amount	
  of	
  reserves.	
  	
  
dum in 2003.
	
  
	
  
Figure  1:	
  1C:urrency	
  
Composition	
  
of	
  Foreign	
  
Reserves	
  
FIGURE
CURRENCY
COMPOSITION
OF
FOREIGN RESERVES
	
  

JAN 2018

1

Source: own chart, based on COFER IMF Data

	
  
	
  
	
  

	
  
1 - Blinder, Alan S. "The role
	
   of the dollar as an international currency." Eastern Economic Journal 22, no. 2 (1996): 127-136.

37



Table des matières de la publication Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018

COUVERTURE
SOMMAIRE
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW with Dick Oskam, Head of Sales for Transaction at ING
FOCUS
Value generation - How to create (more) value for the company with a better capital allocation
Managing bank accounts, the Cinderella of treasury management
Treasury on the Digital Front Line
FORUM
Implementation of EU Tax Rules
Innovative payments solution
Construction de portefeuille : combiner gestion active et passive
Decision Time: Investing in Money Funds after EU Reforms
Payments as a Strategy
Are asia’s corporates ready to repo?
The evolving role of treasurers
THE FINANCIAL RISK OBSERVATORY
NEWS
LIFE BEYOND NUMBERS
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - COUVERTURE
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 2
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - SOMMAIRE
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 4
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - EDITORIAL
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - FINANCIAL HIGHLIGHTS Luxembourg Tax News
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 7
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - INTERVIEW with Dick Oskam, Head of Sales for Transaction at ING
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 9
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Value generation - How to create (more) value for the company with a better capital allocation
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 11
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 12
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 13
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Managing bank accounts, the Cinderella of treasury management
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 15
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 16
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 17
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 18
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Treasury on the Digital Front Line
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 20
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 21
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Implementation of EU Tax Rules
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 23
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Innovative payments solution
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 25
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Construction de portefeuille : combiner gestion active et passive
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 27
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Decision Time: Investing in Money Funds after EU Reforms
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 29
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Payments as a Strategy
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 31
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - Are asia’s corporates ready to repo?
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 33
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - The evolving role of treasurers
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 35
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 36
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - THE FINANCIAL RISK OBSERVATORY
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 38
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 39
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 40
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - NEWS
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 42
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 43
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 44
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 45
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 46
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 47
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 48
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 49
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 50
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 51
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 52
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - LIFE BEYOND NUMBERS
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 54
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 55
Trésorier/Treasurer magazine - N°99 - Nov/Dec/Jan 2018 - 56
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