Most of the banks keep US reserves in order to avoid a run on the banks. Much of the foreign exchange reserve management has to do with government policy on monetary exchange policy. The exchange rate policy unlike US or Canada which are fully convertible, many nations follow fixed exchange rates for example Middle Eastern countries, or they money could be pegged against a basket of currencies which China follows and many other countries in the world. Based on the trading partners the weightage of the basket is determined. Yet another popular way is partially convertible or government intervention.

The 1997 Asian crises taught the importance of having reserves to stabilize in case of flight of foreign capital. Running up to the boom seen past several years central banks and the finance ministers have focused on managing this risk and mitigating it to a large extent. The accumulation of US Dollars by central bankers in Asia, Middle East and Russia has been the largest the world has ever seen. This accumulation led to sovereign wealth funds.