Global shift in foreign exchange reserve holdings

With the US and European economies struggling to keep their heads above water central bank policy makers around the world are looking to diversify into the currencies of developing nations. With the world's largest hoard of foreign exchange reserves, estimated at $2.5 trillion, China apparently is making important moves in this direction.

In all, central banks around the world hold up to $8.7 trillion in foreign exchange reserves.

''We can diversify more the foreign reserves, to consider not only smaller countries, but some emerging-market economies,'' Chinese central bank governor Zhou Xiaochuan said while attending the International Monetary Fund meet in Washington yesterday.

Zhou said that with assets of a larger size, ''you can shift some to riskier, but higher-return investment instruments.''

China has almost tripled its holdings of South Korean government bonds to 5.15 trillion won ($4.6 billion) in the first nine months of this year, according to South Korea's Financial Supervisory Service.

Peruvian central bank president Julio Velarde said in August that he was ''surprised'' to see several monetary authorities buying government bonds denominated in the sol.