2022 $2,739 trillion
2020 $2,402 trillion
2013 $1,956 trillion
2010 $1,460 trillion
2001 $452 trillion
1992 $265 trillion
1970 $6 trillion
Two human things are measured in quadrillions. One is energy — about 640 quadrillion annually burnt “BTUs” heat the world’s homes, propel its ships and planes, run its server banks, and water its gardens. The other is money. The Bank of International Settlements’ most recent Triennial Survey (out last December) says that governments, businesses, banks, tourists, and computerized trading programs exchanged $7.5 trillion in currency daily, or $2.739 quadrillion over the year. With all the zeroes, this is “$2,739,000,000,000,000.” Some particulars:
Scale and rate of growth: Annual currency turnover was a modest $6 trillion exchanged mostly for purposes of tourism, debt repayments, and import/export trade (as had been standard practice since the invention of money in the Lydia kingdom in present-day Turkey) just before the abandonment of the gold-based “Bretton Woods” system in 1971. The contemporary ‘floating exchange’ which replaced Bretton Woods, after an interval of some confusion, launched precisely fifty years ago, on March 1, 1973, and has since become the largest market of any sort in human history. Annual currency trading reached $500 trillion in the early 2000s; hit the $1 quadrillion mark in 2008, and reached $2 quadrillion — mainly for hedging and futures markets rather than more traditional purposes — in 2017 or 2018. Assuming no gigantic upheaval in global finance, current trends suggest $4 quadrillion by 2030.
Currencies: U.S. dollars figured in 88.6% of all world currency exchanges in 2022. This is a bit less than the 89.9% rate of 2001, but more than the 84.9% of 2010. The dollar’s use in currency exchange has been pretty stable over the past 20 years, as has that of the euro and yen. (Euro: 32% of transactions in 2001, 30% in 2022; yen: 15% and 17%). Speculation about the Chinese yuan’s rising role remains, well, speculative: Used in 0.5% of exchanges in 2007, the yuan now appears in 1.6% of transactions in 2022 — rising, but about equal to use of the Mexican peso and well below the Aussie dollar.
Trading sites: Having lost its role as reserve-currency issuer in the 1930s, the U.K. found a new one as the central forex trading site and holds it still. City of London banks and firms handle 38% of world currency trades, or about $1 quadrillion worth each year. New York ranks second with 19%; Singapore, Hong Kong, Tokyo, and Switzerland follow at about 9%, 7%, 4%, and 3% respectively. BiS speculates that Brexit may have slightly reduced the British share of currency trade, with some shift to the United States and Singapore.
To put this in context, blithely ignoring differences between exchanges, value-added output, asset wealth, and so on: $2.7 quadrillion per year is (a) 6 times the estimated $450 trillion value of total world privately held wealth in the forms of real estate, stocks, money, physical possessions, and other assets; (b) 26 times the $104 trillion world GDP of 2022; (c) 100 times the $25 trillion in 2022 goods and services exports, and (c) 400 times the $7 trillion in actually existing physical coins and bills. As to whether this gigantic roar of hedging and futures-trading very significantly raises real-world growth rates or improves global economic efficiency: research appears insufficient.
BIS’ 2022 Triennial Survey on the $2.7 quadrillion annual/$7.5 trillion daily foreign exchange market
In practical terms, over the last six years the currency markets have worked to raise the value of the dollar vis-à-vis other currencies. Some IMF staff thoughts on the implications
And a similar view from currency scholar Jeffrey Frankel
While Barry Eichengreen looks at the geography of currency trading, and the advantage digital technologies and fiber-optic cables may have given to the City of London
Some reference points:
A comparative table: Forex vs. wealth, vs. stocks, vs. GDP, vs. trade, etc.* All figures are for 2022:
Annual currency trading: $2.739 quadrillion
Total privately held world wealth: $464 trillion
Global public & private debt: $235 trillion
World GDP: $104 trillion
Total world stock market capitalization $93 trillion
Total world stock trading $61 trillion
Total world goods/services exports: $28 trillion
U.S. GDP $25 trillion
NYSE market capitalization: $22 trillion
U.S. “M1”** $20 trillion
All world tax revenue for governments $14 trillion
World currency reserves $13 trillion
All the money (physical coins & bills) in the world ~$7 trillion
U.S. currency printed annually $0.3 trillion
* BIS for currency trading; Credit Suisse for world wealth; IMF for world GDP, world debt, and world currency reserves; Federal Reserve for currency in circulation and U.S. annual currency printing; World Bank for world stock trading and tax revenue, NYSE for market cap.
** M1 includes all U.S. currency, money held in bank accounts and CDs, etc. See here.
How much is “all the money in the world”?
Private wealth: Credit Suisse estimates world household wealth in the form of homes, stock portfolios, condos, bank accounts, land, and so on — at $464 trillion for 2022. This is a bit more than double the $221 trillion of 2012, in nominal terms. No estimates are available for government assets (navies, buildings, national parks, etc.), but “all the money in the world” by this definition might be near $1,000,000,000,000,000.
Government reserves: Governments’ “wealth” may be unknown, but in terms of actual ‘money’ they now hold about $12.8 trillion in reserves. As with currency trading (but not quite as much, and not quite so certainly) most of their holdings are, metaphorically, a big pile of dollars. Dollars make up $6.44 trillion of the $10.77 trillion the IMF identifies by currency type — 60% of the total, slightly below 62% for 2012 and noticeably less than the 71% in 2000. Euros account for 20%, and the yen and sterling 5% each. The IMF’s financial reserve data.
Circulating money: The Federal Reserve reports that about $2.3 trillion in actual U.S. paper and metal coins is currently in wallets, bank vaults, cash registers, safes, mason jars, and so on.
Some players:
The U.K.’s Financial Conduct Authority regulates the City of London, the world’s largest currency-exchange center.
The U.S. Treasury Department’s semi-annual currency trading reports on currency values and potential manipulations.
And the Treasury Department monitors dollar exchange rates.
And some history:
Currency was the invention of an anonymous fellow early in the 7th century B.C., most likely in the Kingdom of Lydia in modern-day Turkey, home to semi-legendary King Croesus — and quickly copied by neighboring Greece and Persia. A look at the first coins, with a mini-bio of Croesus and some lumpy-looking early Lydian efforts (made of electrum, a mix of gold and silver) stamped with pictures of lions.
The “money-changers” of the Gospels were a consequence of these innovations six centuries later. For a small fee, they swapped Roman, Greek, and Persian coins carried by out-of-town pilgrims for half-shekel coins minted in Jerusalem and Tyre, with exchange rates depending on the quantities of precious metal contained in the coins, enabling pilgrims to pay the modest tax needed to finance Temple operations, and pay for food, shelter, and shopping during their stay. The account in Matthew.
And the U.S. Mint today.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
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