Of all the countries in the world, China had, by far, the largest international reserves in 2022, with 3.46 trillion USD in reserves and foreign currency liquidity. Japan and Switzerland were the only other countries with over a trillion U.S. dollars in reserves in early 2022, with a total of 1.4 trillion U.S. dollars and nearly one trillion U.S. dollars respectively.
Why do countries hold reserves?
A simple explanation for China’s accumulation of foreign currency could be its consistently positive and substantial trade balance. When China exports goods and services, it accepts the foreign currency, usually U.S. dollars, and holds that currency in reserve. In addition to facilitating trade, most countries, including China, also hold foreign exchange reserves to ensure the stability of their currencies and facilitate other foreign transactions.
Other significant reserves
Even though most of the world left the gold standard in 1971, most countries still retain large gold reserves. The United States, followed by Germany and Italy, held the largest amount of gold reserves worldwide as of December 2018.
