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This study examines the determinants influencing the selection of international investment currencies, using the IMF Coordinated Portfolio Investment Survey (CPIS). The novelty of this study is that it analyzes the currency composition of international investment assets, while previous studies examine that of foreign exchange reserves or trade invoicing. The empirical results show that bilateral financial links between investors and currency issuers significantly affect the choice of investment currency, but trade links do not. The level of financial market development in a currency-issuing country is found to be an important criterion for the choice of investment currency. While past military alliances do not significantly affect currency choice, pro-Russian countries in the recent war in Ukraine increase the share of both US dollar and Chinese renminbi assets, reducing euro-denominated assets. These results suggest that the dollar-dominant regime is likely to persist even in a geopolitical era.
