The US dollar's dominance as the global reserve currency is waning as central banks diversify their holdings. While the dollar remains the leading reserve currency, its share has been steadily declining for years.
The US dollar continued its decline as the global reserve currency , losing further ground among many reserve currencies held by central banks . Its share has been steadily decreasing for years as central banks diversify their holdings into assets denominated in currencies other than the dollar, and also into gold. Despite this, the dollar remains the dominant global reserve currency . According to the IMF's COFER data for Q3 2024, the share of USD-denominated foreign exchange reserves fell to 57.
4% of total exchange reserves, the lowest since 1994. This includes US Treasury securities, US agency securities, US MBS, US corporate bonds, US stocks, and other USD-denominated assets held by central banks outside the Fed. In Q1 2015, the USD's share was still 66%. Over the past 10 years, the dollar's share of global reserve currencies has dropped by 8.6 percentage points. If this decline continues, the dollar's share will fall below 50% in less than 10 years, by the end of 2034. The dollar's share had previously dipped below 50% in 1990 and 1991, after a long period of decline from 85% in 1977 to 46% in 1991. This decline was fueled by inflation in the US during the 1970s, leading to a loss of confidence in the Fed's ability to control it. However, by the 1990s, central banks began accumulating dollar assets again, until the euro emerged. While the dollar's share is declining, foreign central banks and other foreign holders continue to increase their holdings of US Treasury securities. Over the past 12 months, they have added $880 billion, bringing their total holdings to a record $8.67 trillion, according to the Treasury Department's TIC data
US Dollar Reserve Currency Central Banks Diversification Global Economy
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