United States
Here’s How Reserve Currencies Have Evolved Over 120 Years
Here’s How Reserve Currencies Have Evolved Over 120 Years
Over the last 120 years, the popularity of different reserve currencies have ebbed and flowed, reflecting the shifting fortunes of leading global economies.
For example, in the year 1900, the U.S. dollar and pound sterling made up 0% and 62% of global reserves respectively. But fast forward to 2020, and the pound now represents just 4.7% of global currency reserves, while the U.S. dollar stands at nearly 60%.
Today’s motion graphic from James Eagle looks at the year-over-year change in currency reserves as a portion of total reserves, spread across 120 years.
Currency | 1900 | 1920 | 1940 | 1960 | 1980 | 2000 | 2020 |
---|---|---|---|---|---|---|---|
U.S. Dollar | 0.0% | 28.4% | 27.9% | 61.7% | 57.9% | 71.2% | 59.0% |
Euro | 0.0% | 0.0% | 0.0% | 0.0% | 17.5% | 18.5% | 21.2% |
Deutsche mark | 14.7% | 4.2% | 0.0% | 0.0% | 12.9% | 0.0% | 0.0% |
Japanese yen | 0.0% | 0.0% | 0.0% | 0.0% | 3.9% | 5.8% | 6.0% |
Pound sterling | 62.0% | 57.3% | 68.9% | 35.1% | 2.4% | 2.7% | 4.7% |
Chinese renminbi | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 2.3% |
French franc | 17.5% | 6.2% | 2.1% | 1.3% | 1.0% | 0.0% | 0.0% |
Canadian dollar | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 2.1% |
Australian dollar | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 1.8% |
Swiss franc | 0.0% | 0.0% | 0.8% | 0.3% | 2.2% | 0.3% | 0.2% |
Dutch guilder | 0.0% | 3.9% | 0.3% | 0.1% | 0.9% | 0.0% | 0.0% |
Other | 5.7% | 0.0% | 0.0% | 1.6% | 1.3% | 1.5% | 2.7% |
What is a Reserve Currency?
A reserve currency is a large quantity of currency held in “reserve” by monetary authorities like central banks.
Currencies are often held in reserve in preparation for investments and transactions, among other things. Our vast global trade system, which is approaching $20 trillion in value, means plenty of currencies are always needed in reserve. In fact, an estimated $5 trillion in currency swaps hands every single day.
Here are some reasons that currency reserves are held:
- Exchange rate stability for the domestic currency
- To ensures liquidity in times of crisis
- To diversify central bank portfolios, which can reduce risk and improve credit ratings
- More than 65 countries peg their currencies to the U.S. dollar
- Five U.S. territories and a number of sovereign countries, such as Ecuador and Panama, use it as an official currency of exchange
- Around 90% of all Forex trading involves the U.S. dollar
All things equal, countries benefit economically from greater demand for their respective currencies.
The Rise and Fall of Reserve Currencies
Some economists argue that the demand for currencies in the long run revolves around the economic relevance of a country. In general, the larger and more powerful a nation’s economy is, the greater the network effect, and the more interlinked they are to the global economy. Thus, the greater demand there is to hold their currency in reserve.
The last 120 years of currency reserve data shows some support for this claim. For example, Japan’s economy hit a peak in terms of its relative share of global GDP in the early 1990s, just before the effects of the Lost Decade were felt. Subsequently, their peak as a reserve currency was around the same horizon, at 9.4% in 1990.
America’s Era of Dominance
Due to the economic strength of the United States in the post-WWII era, the dollar is what economists call a vehicle currency.
This means many non-dollar economies still choose to engage in international transactions using the dollar. These smaller and less accepted currencies are often converted to U.S. dollars before proceeding with any business or trade dealings. This is why, although Asian economies tend to have neighboring states as their top trade partners, they still engage in a massive portion of these transactions with the U.S. greenback as the currency of choice.
Here are some facts that further exemplify the strength and power of the U.S. dollar:
Additionally, the dollar is often seen as a haven in times of extreme uncertainty and tumult. Given its status as the world’s reserve currency, it can be perceived as less risky and can withstand economic shock to a greater degree relative to other currencies.
New Challengers to the Dollar
In the not too distant past, the U.S. displaced the UK economically and as the world’s reserve currency. Today, the U.S. economy is showing signs of slowing down, based on GDP growth.
China is on the rise, having already displaced the U.S. as the EU’s top trade partner. With projections for China to overtake the U.S. as the world’s largest economy before 2030 in nominal terms, could a new global reserve currency emerge?

This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.
Maps
Mapped: How Much Does it Take to be the Top 1% in Each U.S. State?
An annual income anywhere between $360,000-$950,000 can grant entry into the top 1%—depending on where you live in America.

How Much Does it Take to be the Top 1% in Each U.S. State?
There’s an old saying: everyone thinks that they’re middle-class.
But how many people think, or know, that they really belong to the top 1% in the country?
Data from personal finance advisory services company, SmartAsset, reveals the annual income threshold at which a household can be considered part of the top 1% in their state.
Some states demand a much higher yearly earnings from their residents to be a part of the rarefied league, but which ones are they, and how much does one need to earn to make it to the very top echelon of income?
Ranking U.S. States By Income to Be in the Top 1%
At the top of the list, a household in Connecticut needs to earn nearly $953,000 annually to be part of the one-percenters. This is the highest minimum threshold across the country.
In the same region, Massachusetts requires a minimum annual earnings of $903,401 from its top 1% residents.
Here’s the list of all 50 U.S. states along with the annual income needed to be in the 1%.
Rank | State | Top 1% Income Threshold | Top 1% Tax Rate (% of annual income) |
---|---|---|---|
1 | Connecticut | $952,902 | 28.40% |
2 | Massachusetts | $903,401 | 27.15% |
3 | California | $844,266 | 26.95% |
4 | New Jersey | $817,346 | 28.01% |
5 | Washington | $804,853 | 25.99% |
6 | New York | $776,662 | 28.29% |
7 | Colorado | $709,092 | 25.86% |
8 | Florida | $694,987 | 25.82% |
9 | Illinois | $660,810 | 26.35% |
10 | New Hampshire | $659,037 | 26.25% |
11 | Wyoming | $656,118 | 24.79% |
12 | Virginia | $643,848 | 26.11% |
N/A | National Average | $652,657 | N/A |
13 | Maryland | $633,333 | 25.94% |
14 | Texas | $631,849 | 25.83% |
15 | Utah | $630,544 | 23.77% |
16 | Minnesota | $626,451 | 25.53% |
17 | Nevada | $603,751 | 25.19% |
18 | South Dakota | $590,373 | 22.99% |
19 | Pennsylvania | $588,702 | 24.95% |
20 | North Dakota | $585,556 | 24.76% |
21 | Georgia | $585,397 | 25.06% |
22 | Oregon | $571,813 | 24.66% |
23 | Arizona | $564,031 | 25.22% |
24 | Idaho | $560,040 | 23.17% |
25 | North Carolina | $559,762 | 25.31% |
26 | Montana | $559,656 | 24.46% |
27 | Kansas | $554,912 | 25.03% |
28 | Rhode Island | $548,531 | 25.26% |
29 | Tennessee | $548,329 | 25.12% |
30 | Alaska | $542,824 | 25.38% |
31 | Nebraska | $535,651 | 24.10% |
32 | Delaware | $529,928 | 25.37% |
33 | Vermont | $518,039 | 23.63% |
34 | Wisconsin | $517,321 | 24.90% |
35 | South Carolina | $508,427 | 24.40% |
36 | Michigan | $504,671 | 25.01% |
37 | Maine | $502,605 | 24.04% |
38 | Missouri | $500,626 | 24.93% |
39 | Ohio | $500,253 | 25.09% |
40 | Hawaii | $495,263 | 24.12% |
41 | Iowa | $483,985 | 24.09% |
42 | Indiana | $473,685 | 24.55% |
43 | Alabama | $470,341 | 23.82% |
44 | Oklahoma | $460,172 | 23.68% |
45 | Louisiana | $458,269 | 24.80% |
46 | Arkansas | $450,700 | 21.11% |
47 | Kentucky | $445,294 | 24.14% |
48 | New Mexico | $411,395 | 23.35% |
49 | Mississippi | $381,919 | 23.04% |
50 | West Virginia | $367,582 | 23.26% |
N/A | National Median Household Income | $75,000 | N/A |
California ($844,266), New Jersey ($817,346), and Washington ($804,853) round out the top five states with the highest minimum thresholds to make it to their exclusive rich club.
On the other end of the spectrum, the top one-percenters in West Virginia make a minimum of $367,582 a year, the lowest of all the states, and about one-third of the threshold in Connecticut. And just down southwest of the Mountain State, Mississippi’s one-percenters need to make at least $381,919 a year to qualify for the 1%.
A quick glance at the map above also reveals some regional insights.
The Northeast and West Coast, with their large urban and economic hubs, have higher income entry requirements for the top 1% than states in the American South.
This also correlates to the median income by state, a measure showing Massachusetts households make nearly $90,000 a year, compared to Mississippians who take home $49,000 annually.
How Much Do the Top 1% Pay in Taxes?
Meanwhile, if one does make it to the top 1% in states like Connecticut and Massachusetts, expect to pay more in taxes than other states, according to SmartAsset’s analysis.
The one-percenters in the top five states pay, on average, between 26–28% of their income in tax, compared to those in the bottom five who pay between 21–23%.
And this pattern exists through the dataset, with higher top 1% income thresholds correlating with higher average tax rates for the wealthy.
State Ranks | Median Tax Rate |
---|---|
Top 10 | 26.65% |
20-30 | 25.09% |
30-40 | 24.65% |
10-20 | 25.07% |
40-50 | 23.75% |
These higher tax rates point to attempts to reign in the increasing wealth disparity in the nation where the top 1% hold more than one-third of the country’s wealth, up from 27% in 1989.
Where Does This Data Come From?
Source: SmartAsset’s America’s Top 1% Is Different in Each State uses data from 2020 individual tax filings from the IRS, adjusted to 2023 dollars using the Bureau of Labor Statistics’ Consumer Price Index.
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