Not so long ago the dollar was the world's only reserve currency. Everything else was ono step down in terms of safety and liquidity, and major financial institutions acted accordingly, accumulating dollars for the risk-free parts ...
John Rubino writes:
"... Categorizing Canadian and Australian dollars as reserve currencies makes sense when you view those countries in terms of gold, oil, sunshine and other resources per citizen. By that measure, each Canadian and Australian dollar is backed by a lot more real value than are the currencies of the paper-dependent societies like the US, Europe and Japan. If, as seems likely, we're in the early stages of a shift away from financial assets and towards real things, the relative strength, and currency exchange rates, of the better-run resource-based economies will keep improving, making their currencies less risky and more profitable investments.
"Note that the Chinese renminbi (aka the yuan) and Singapore dollar aren't on the list. But they will be soon, with China now the second biggest economy (and an aggressive importer of gold) and Singapore becoming the preferred destination of global savings (especially gold storage) now that Switzerland has been cracked by the IRS and other tax authorities. ..."