From the abstract to “A Note on Reserve Currencies
with Special Reference to the G-20 Countries”
It is most likely that the current reserve currencies will retain their status in the near future, given the persistence in the composition of reserve holdings.
However, since we do not have complete data on the switchovers in lead reserve currencies, a great deal of uncertainty attends any forecasts. Hence, it is possible that new reserve currencies might appear with greater rapidity than anticipated. Of the candidates for new reserve currencies among the major emerging economies, the renminbi (RMB) is the most plausible. However, even under optimistic assumptions regarding economic growth and financial development, RMB status as a major reserve currency is some time off. A role for regional reserve currency status in the near future is much more likely. The advent of a multi-reserve currency world is unlikely to have negative consequences for global financial stability (and might be stability-enhancing). However, achieving the prerequisites for reserve currency status will force sacrifices in terms of policy autonomy. In addition, reserve currency status might reduce international competitiveness for individual countries, as higher currency demand appreciates their currencies.
Some insight regarding the rise of new reserve currencies (that do not supplant the lead reserve currency) can be gleaned from the experience of the Germany-UK switch.
Figure 4: (from Chinn, 2012) Five year moving average of log ratio of German to UK GDP (at current exchange rates), and differential estimated currency shares of reserves of all central banks, year-end, 1955-1980. Source: IMF, International Financial Statistics; IMF, Annual Reports, Chinn and Frankel (2008).
Figure 4 indicates that economic size does not directly determine reserve currency importance, although it does have an impact, with a lag.
The complete note is here.