According to the most recent data available, the IMF estimates that central banks around the world shifted quite a few of their reserves out of the euro in Q2.  While Europe’s common currency as a proportion of total reserves has remained fairly constant over time, last quarter’s decline is the second largest since the euro’s inception.

What may have precipitated such a large shift?  Perhaps central banks are not too keen to pay interest on those euro-denominated assets–a condition imposed by the ECB when it cut its Deposit Facility interest rate to -0.10 in early June.

A second cut to the deposit rate in September–combined with short-term yields in a number of European countries falling below zero–would not seem to bode well for a reversal in central banks’ preference for holding euros.