While there has been a lot of talk about the U.S. Dollar being replaced by other currencies, the Greenback remains dominant for now.
US Dollar’s Share in Global Reserves Declines to 58%: Is There a Clear Successor?
- The US$ accounted for 58% of total global reserves at the end of 2022, down from 65% during 1Q16.
- While this may seem concerning, it is notable that the Chinese renminbi accounted for only 2.7% of the total at the end of 2022, with the Euro’s share remaining largely unchanged since 2016.
- It is likely that the US$ share will continue to decline, however, there is no clear successor for the Greenback currently. This implies that the U.S. has some time to fix structural economic problems to repair a loss of confidence in our currency that is causing other countries to seek alternatives.
Source: Currency Composition of Official Foreign Exchange Reserves (COFER), International Financial Statistics (IFS)