USD Reserve Currency Status to Remain Unchallenged
(29 June 2023 – United States) Global reserve banks concur that the US Dollar (USD) will retain its standing as “the” dominant global reserve currency over the next decade.
Research by the Official Monetary and Financial Institutions Forum (OMFIF) found that central banks managing US$5 trillion of assets expect the dollar to continue to decline as a proportion of global reserves at a steady pace to account for 54 percent of the total in ten years’ time, compared with 58 percent currently.
The call comes in the face of growing calls from some countries such as the BRIC economic bloc for the adoption of alternative reserve currencies yet each are characterised by their own limitations.
Just over one in ten central banks in the OMFIF research said they expected to increase holdings in China’s currency (13 percent), down from over 30 percent in 2022. However on a 10-year horizon, two-fifths of central banks expected to add to their RMB holdings, forecasting that its share of global reserves would double from three percent to six percent by 2033.
“The sense of de-dollarisation is in line with the historic trend over the last ten years. Reserve managers are telling us there’s unlikely to be a major trend from that path” stated OMFIF Managing Director, Nikhil Sanghani.
“Reserve managers are saying that in ten years we want to move in the RMB direction but now is not the time to do it”
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