The IMF has been tracking the world’s foreign exchange currencies closely since the introduction of the Euro in 1999. Well, as closely as they can... China has always refused to provide a breakdown of the currency composition of their FX reserves. We believe there’s a lot of U.S. Dollars in that mysterious “Unallocated Reserves” category, perhaps as much as 80%, but no one can know for sure.

This chart should be disturbing to holders of U.S. Dollars for two reasons: one, under the cloak of “Unallocated Reserves,” China can begin getting out of the U.S. Dollar without any alarm bells going off; and two, the known reserves of U.S. Dollars as a percentage of the world’s total FX reserves are falling fast, dropping from over half to less than 40% in just ten years.