Connect with us

Markets

The World’s Most Powerful Reserve Currencies

Published

on

The World's Most Powerful Reserve Currencies

The World’s Most Powerful Reserve Currencies

When we think of network effects, we’re usually thinking of them in the context of technology and Metcalfe’s Law.

Metcalfe’s Law states that the more users that a network has, the more valuable it is to those users. It’s a powerful idea that is exploited by companies like LinkedIn, Airbnb, or Uber — all companies that provide a more beneficial service as their networks gain more nodes.

But network effects don’t apply just to technology and related fields.

In the financial sector, for example, stock exchanges grow in utility when they have more buyers, sellers, and volume. Likewise, in international finance, a currency can become increasingly entrenched when it’s accepted, used, and trusted all over the world.

What’s a Reserve Currency?

Today’s visualization comes to us from HowMuch.net, and it breaks down foreign reserves held by countries — but what is a reserve currency, anyways?

In essence, reserve currencies (i.e. U.S. dollar, pound sterling, euro, etc.) are held on to by central banks for the following major reasons:

  • To maintain a stable exchange rate for the domestic currency
  • To ensure liquidity in the case of an economic or political crisis
  • To provide confidence to international buyers and foreign investors
  • To fulfill international obligations, such as paying down debt
  • To diversify central bank portfolios, reducing overall risk

Not surprisingly, central banks benefit the most from stockpiling widely-held reserve currencies such as the U.S. dollar or the euro.

Because these currencies are accepted almost everywhere, they provide third-parties with extra confidence and perceived liquidity. This is a network effect that snowballs from the growing use of a particular reserve currency over others.

Reserve Currencies Over Time

Here is how the usage of reserve currencies has evolved over the last 15 years:

Currency composition of official foreign exchange reserves (2004-2019)
🇺🇸 U.S. Dollar 🇪🇺 Euro🇯🇵 Japanese Yen🇬🇧 Pound Sterling 🌐 Other
200465.5%24.7%4.3%3.5%2.0%
200962.1%27.7%2.9%4.3%3.0%
201465.1%21.2%3.5%3.7%6.5%
201961.8%20.2%5.3%4.5%8.2%

Over this timeframe, there have been small ups and downs in most reserve currencies.

Today, the U.S. dollar is the world’s most powerful reserve currency, making up over 61% of foreign reserves. The dollar gets an extensive network effect from its use abroad, and this translates into several advantages for the multi-trillion dollar U.S. economy.

The euro, yen, and pound sterling are the other mainstay reserve currencies, adding up to roughly 30% of foreign reserves.

Finally, the most peculiar data series above is “Other”, which grew from 2.0% to 8.4% of worldwide foreign reserves over the last 15 years. This bucket includes the Canadian dollar, the Australian dollar, the Swiss franc, and the Chinese renminbi.

Accepted Everywhere?

There have been rumblings in the media for decades now about the rise of the Chinese renminbi as a potential new challenger on the reserve currency front.

While there are still big structural problems that will prevent this from happening as fast as some may expect, the currency is still on the rise internationally.

What will the composition of global foreign reserves look like in another 15 years?

Click for Comments

Markets

The Top Retailers in the World, by Store Count

Here are the top retailers in the world by physical store presence, illustrating the dominance of convenience and drug store chains.

Published

on

This circle graphic shows the retailers with the highest number of locations worldwide.

The Top Retailers in the World, by Store Count

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Which retail chains have the highest global store counts?

Owing to their rapid speed of service in providing the basics to customers, convenience chains stand as the clear leaders. Going further, their smaller footprint allows them to expand their store counts at a greater scale.

This graphic shows the top retailers in the world by store count, based on data from the National Retailers Federation.

Japanese Retailers Dominate the Pack

Below, we show the global retailers with the most physical storefronts in 2023:

RankingRetailerTotal Stores WorldwideIndustryHeadquarters
1Seven & I40,454Convenience Store🇯🇵 Japan
2FamilyMart24,251Convenience Store🇯🇵 Japan
3Lawson21,902Convenience Store🇯🇵 Japan
4CP All16,042Convenience Store🇹🇭 Thailand
5AS Watson16,014Drug Store🇭🇰 Hong Kong
6Schwarz Group14,112Discount Grocery🇩🇪 Germany
7Carrefour14,014Supermarkets🇫🇷 France
8Couche-Tard13,505Convenience Store🇨🇦 Canada
9Aldi13,475Discount Grocery🇩🇪 Germany
10Walgreens Boots Alliance12,961Drug Store🇺🇸 U.S.

Leading by a wide margin is Japan’s Seven & I Holdings, with 40,454 store locations worldwide.

The retail giant includes the 7-Eleven franchise along with Ito-Yokado, its supermarket chain. While the world’s largest convenience chain traces its origins to Dallas, Texas, the remainder of the U.S-based company (27%) was acquired in 2005 in a $1.2 billion deal that took the company fully private. Today, the company operates in 10 markets globally.

Next in line are Japan’s FamilyMart and Lawson, each boasting over 20,000 locations. For perspective, Walmart, America’s largest retail company by revenues, operates 10,569 locations globally.

In Europe, Germany’s discount grocery chain Schwarz takes the lead, due to its extensive network of stores. Operating across 30 countries and with over 500,000 employees, the no-frills chain stands as a powerhouse. France’s supermarket giant, Carrefour, follows closely behind.

Ranking in eighth is Canadian retailer, Couche-Tard, with stores largely concentrated in North America and Europe. Since 2004, the company has made over 60 acquisitions, including 2,200 gas stations from French oil company TotalEnergies in 2023. The company is known for its Circle K brand, which operates in 24 countries globally.

Closing off the list is Walgreens Boots Alliance, the only American retailer in the rankings. The company owns the ubiquitous UK-based Boots brand, which was founded in 1849 in Nottingham. Yet as profits margins face increasing strains, it is looking to sell the subsidiary and instead focus more heavily on its U.S. pharmacy and healthcare businesses. With a presence in 13 countries, the pharmacy chain operates 12,961 stores worldwide.

Continue Reading
Visualizing Asia's Water Dilemma

Subscribe

Popular