They argue that the likelihood of self-fulfilling runs on reserve currencies would increase, insofar as investors could switch more easily from one currency to another, seeking to convert their holdings first for fear of suffering losses down the line. 28 These concerns might be overblown, however.
First, the extent of price adjustments would depend significantly on the degree of substitutability between reserve assets and on whether reserve currencies would be seen by investors as substitutes or complements. Second, official reserve managers have a longer time horizon than private market participants and are therefore more likely to act as stabilising rather than destabilising investors.