Reserve accumulation and prospects for international monetary system

Increased frequency and intensity of financial crises after the financial liberalization along with recent current account imbalances in the global economy caused unprecedented reserve accumulation. On the other hand, concentration in the reserve assets depending on the US economy, of whose current account deficit continuously growing and whose public debt reaches to 97 percent of its GDP, is driving the global economy to a new "Triffin Paradox". In this context, the aim of this thesis is to seek the possibilities weather US dollar can retain its leading reserve currency status or global economy will demand a new leading reserve currency. In the study, descriptive variables for status of reserve assets modelled by panel data method for the period of 1979 – 2015 and trend of reserve assets is analyzed under possible scenarios. The US dollar may stay as leading reserve currency if US can maintain its financial development progress as observed in previous decades. Otherwise, decline of the US GDP share in global economy and devaluation in the US dollar continue, it is expected that the US dollar will lost its leading position in reserve assets. In the thesis, it is also envisaged that the share of the Euro to decline under each possible scenario, euro is not expected to be demanded as a leading reserve currency. And, even it is not expected in the short and medium term; yuan has the potential to be a strong candidate for leading reserve currency in the long term if China opens its financial markets, makes the yuan convertible, issues yuan-denominated assets, etc.