Thursday, September 07, 2006

Chinese FX reserves

"What am I gonna do with all this dough?". That seems to be the question for many foreign central banks holding excess foreign exchange reserves.

Much of the reserves are held in the form of dollars and dollar-denominated assets, and countries like China are wondering what to do with all their cash. A recent FT.com Lex piece pointed out that investment returns on these holdings are modest, and diversifying away from fiat currencies is not as easy as it sounds.

See "Chinese FX reserves" for more.