The difference, which banks offset through transactions in the inter bank currency market, has a significant impact on China s foreign exchange reserves, but is not equivalent to the net change in foreign exchange reserves during the same period.

Instead, banks have hoarded the increase in the monetary base in the form of idle excess reserves.

It may pile up in bank reserves or savings accounts, or it may produce asset bubbles.

Indeed, the credit channel is frozen and velocity has collapsed, with banks hoarding increases in base money in the form of excess reserves.

This may result in extra reserves, which commercial banks cannot use to extend their credit lines.

And, in Europe, the sovereigns must address firmly their financing problems through credible fiscal consolidation. In addition, to support growth, banks must have sufficient capital buffers.

Bank capital is not cash reserves that must be set aside it is unborrowed money that can be used to make loans.

They note that the enormous expansion of commercial banks reserves has not led to a comparable increase in the supply of money and credit.

Banks on the list must keep higher reserves, and maintain more liquidity, reflecting their status as systemically important institutions.

The reason is simple while base money is soaring, the velocity of money has collapsed, with banks hoarding the liquidity in the form of excess reserves.

Credit quotas imposed early this year have left Chinese commercial banks with 2 3 of extra reserves.

Commercial banks could hold them without setting aside any capital reserves, and the European Central Bank (ECB) accepted them on equal terms at its discount window.

The credit channel also is not working properly, as banks have hoarded most of the extra liquidity from QE, creating excess reserves rather than increasing lending.

Central banks held only an estimated 46 of their foreign exchange reserves in dollars in 1992, but that share rebounded to almost 70 by 2000.

At the same time, the IMF s data indicate that the vaunted renminbi is not yet among the top seven currencies in terms of central bank reserve holdings.

When the Fed buys Treasury bonds or other assets like mortgage backed securities, it creates reserves for the commercial banks, which the banks deposit at the Fed itself.

While subdued liquidity and credit growth are delaying the inflationary impact of the Fed s determination to expand banks already massive reserves, America cannot escape inflation forever.

With fear of bank runs and defaults receding, banks reserve ratios became ever smaller, thus increasing their lending facilities.

Besides the largest conventional oil reserves and the second largest natural gas reserves in the Western Hemisphere, Venezuela has non conventional oil deposits (extra heavy crude oil, bitumen and tar sands) approximately equal to the world's reserves of conventional oil.

Smaller reserves are found in the United States.

Africa is a continent rich in energy, holding two thirds of the world s reserves of hydro electric power trillions of kilowatt hours representing about half of total world resources.

But General Babangida also has deep pockets.

Gas reserves should last about 50 years at present rates of consumption.

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With 2 trillion in excess reserves, and the prospect of as much as 85 billion added each month, banks receive 5 billion a year, and rising, without taking any risk.

Will exchange rates between the major currencies be dangerously unstable? Will those responsible for managing central bank reserves, seeking to maximize returns, shift erratically between those currencies?

The Fed has printed new bank reserves with reckless abandon.

At the end of 2012, China s commercial banks held 6.4 trillion in core capital and 1.5 trillion in non performing loan provisions, for a risk cushion of roughly 8 trillion.

Once upon a time (less than a year ago), it was possible to imagine international reserve portfolios dominated by the dollar and euro today, anxious central bankers are desperate for alternatives to both sick currencies.

In response, central banks may intervene in currency markets to prevent appreciation, at the cost of accumulating low yield foreign reserves and diverting themselves from their primary goal of price stability.

A mechanism that allows rich countries that don t need additional reserves to transfer their allocations to those that do is readily available, using the IMF s gold reserves.

In the past decade, YPF s reserves diminished significantly, along with those of most oil companies operating in Argentina, because investment in exploration was greatly reduced.

The most obvious answer is that at an earlier stage in the Latin American saga, the banks simply could not have afforded to take such losses on their capital. They needed to fake it for seven years in order to build up adequate reserves against losses.

Nevertheless, financial investors are increasingly worried that inflation will eventually begin to rise, owing to the large expansion of commercial bank reserves engineered by the United States Federal Reserve and the European Central Bank (ECB).

As a result, the country s energy reserves have also become an investment magnet.

The country's oil reserves have played a major role in its growing wealth and influence.

The reason is simple while base money is soaring, the velocity of money has collapsed, with banks hoarding the liquidity in the form of excess reserves.

Nowhere is this phenomenon more pronounced than in the United States, where the Federal Reserve has reduced interest rates to unprecedented levels and, through quantitative easing (QE), augmented bank reserves by purchasing financial assets.

Also during the war, geologists discovered large reserves of gold that would be mined in the 1950s.

How to Bail out Good Banks and Let Bad Banks Fail

Ten years after the common currency s introduction, the 16 member euro zone has the world s second most important currency, accounting for more than a quarter of all central banks foreign exchange reserves and having overtaken the dollar as the currency of choice for international bond issues.

The hotly debated question nowadays is whether the transition to higher mandatory reserves would involve excessive short term costs (as banks will likely increase lending spreads and reduce credit volumes).

In other words, France uses African reserves to finance part of its budget deficit at a concessional interest rate.

He became enormously popular in Iran after he nationalized Iran's petroleum industry and oil reserves.

In 2005 it had proven recoverable coal reserves of 171 million tons.