swalsh81I was saying that going by this graph http://en.wikipedia.org/wiki/File:Reserve_currencies.svg and you can see the IMF report from where the data was taken in the source section. There certainly are alot of countries that hold other currencies in reserve, but the dollar is the majority. Even though the governments of individual countries have given themselves a monopoly on the production of money based on fiat currency, the world as a whole is still more or less under a system of competing currencies. I would also assume that there is some amount of a “network effect” (http://mises.org/misesreview_detail.aspx?control=310) that comes into play in these currencies. one country might hold dollars over yen simply because it is easier to exchange with on the world economy should they need to. This might create more incentive to stay with a slightly more volatile currency.
As far as why they devalue, in the case of the US, when the central bank prints money, it is either used to buy treasury bonds so the government can spend or to be loaned out to other banks and the fractional reserve banking scheme starts. In either case, the government or the banks and the large companies they loan to are able to be the first ones to spend that money. This means that the they can spend money at pre-devalued valued since the money hasnt yet worked its way through the economy and caused inflation.
They also do it based on the false Keynesian idea that more money moving in the economy must necessarily be better.
I certainly dont understand international banking as well as I would like to so these are merely my speculations