Monetary Authorities with the largest foreign reserves in 2007

At the end of 2006, 65.7% of the identified official foreign exchange reserves in the world were held in United States dollars and 25.2% in euros.

Monetary Authorities with the largest foreign reserves in 2007. Rank Country/Monetary Authority billion USD (end of month) 1 People's Republic of China $1434 (September) 2 Japan $954 (October) — Eurozone $483 (September) 3 Russia $448 (November 2) 4 India $267 (November 2) 5 Republic of China (Taiwan) $266 (October) 6 South Korea $257 (September) 7 Brazil $173 (November 13) 8 Singapore $158 (October) 9 Hong Kong $142 (October) 10 Germany $126 (September)

Large reserves are often seen as a strength, as it indicates the backing a currency has. Low or falling reserves may be indicative of an imminent bank run on the currency or default, such as in a currency crisis.

Foreign exchange reserves are important indicators of ability to repay foreign debt and for currency defense, and are used to determine credit ratings of nations, however, other government funds that are counted as liquid assets that can be applied to liabilities in times of crisis include stabilization funds, otherwise known as Sovereign wealth funds. If those were included, Norway and Persian Gulf States would rank higher on these lists, and UAE's $1.3 trillion Abu Dhabi Investment Authority would be second after China. Singapore also has significant government funds including Temasek Holdings and GIC. India is also planning to create its own investment firm from its forex reserves.

(http://en.wikipedia.org)