Foreign-exchange Reserves - Excess Reserves

Excess Reserves

Foreign exchange reserves are important indicators of ability to repay foreign debt and for currency defense, and are used to determine credit ratings of nations, however, other government funds that are counted as liquid assets that can be applied to liabilities in times of crisis include stabilization funds, otherwise known as sovereign wealth funds. If those were included, Norway, Singapore and Persian Gulf States would rank higher on these lists, and United Arab Emirates' estimated $627 billion Abu Dhabi Investment Authority would be second after China. Apart from high foreign exchange reserves, Singapore also has significant government and sovereign wealth funds including Temasek Holdings, valued in excess of $145 billion and Government of Singapore Investment Corporation, valued in excess of $330 billion. India is also planning to create its own investment firm from its foreign exchange reserves.

On May 2011, an estimated that Asia has $3.5 trillion of foreign reserves or is around two-thirds of the world's reserves and a stark contrast to the indebtedness in many developed Western economies.