Reserve Currencies

The article examines the main trends in the changing structure of official reserve assets. For more than half a century the US dollar has been the dominant reserve currency in most countries. The dollar’s reserve currency status has been based on its global use for trade invoicing, cross-border investment and exchange rate anchoring. The dollar’s dominance was also supported by the US status as a global power, one that helps to guarantee the security of its allies. But, since the beginning of this century, two important trends can be noted: a significant increase in the total volume of global reserve assets and a decrease in the dollar’s share in them. Мany central banks, especially holders of excessive reserve assets, have taken the path of diversifying their foreign exchange reserves, increasing the share of nontraditional reserve currencies and gold, and reducing dependence on the dollar. The dominant role of the dollar is also under pressure from the policies pursued by issuers of competing currencies in order to strengthen their international role, primarily by the EU and China. A potential threat to the dollar’s dominance may be the development by many countries of the central bank digital currencies, which are expected to be used in cross-border transactions. The trend of de-dollarization of reserve assets is promoted by the US itself, which actively uses the policy of sanctions to achieve its foreign policy goals, which undermines confidence in the dollar. Rising geopolitical tensions could trigger strategic adjustments in the structure of foreign exchange reserves

Central bank · Currency · Dominance (genetics) · Foreign-exchange reserves · Liberian dollar · Order (exchange) · Reserve currency · Reserve requirement · Special drawing rights · Fiscal Policies and Political Economy · Global Financial Crisis and Policies · Monetary Policy and Economic Impact

• RMB Internationalization

  A Kuznetsov, А В Кузнецов•World Economy and International…•2026

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