The Unstable Position of the Dollar: A Turning Point for the Global Reserve System
The year 2025 sees dramatic changes in the global economy and geopolitical landscape, posing a severe challenge to the dollar's absolute status as the world's reserve currency. According to the latest report from the Official Monetary and Financial Institutions Forum (OMFIF), an increasing number of central banks are opting to reduce the proportion of dollar assets, instead diversifying with gold, euros, and yuan. The era of dollar hegemony may quietly be drawing to a close.
Gold: A New Haven for Central Banks
According to an OMFIF survey of 75 central banks globally, more than a third plan to increase their gold reserves in the next one to two years, marking the highest level in five years. Moreover, 40% of central banks expect to continue increasing gold holdings over the next decade, reflecting sustained confidence in its long-term strategic value.
Both BIS and OMFIF highlight that gold, not reliant on any national credit, is the "ultimate asset" to counter global political and financial risks. Especially after the U.S. "Liberation Day Tariff" policy was introduced in April 2025, neither the dollar nor U.S. bonds became safe havens, prompting countries to reassess gold's proportion in their reserve portfolios.
The Euro: The Most Favored Short-Term Alternative Currency
Amid declining trust in the dollar, the euro emerges as one of the most favored foreign exchange assets among central banks. The OMFIF survey indicates that a net 16% of central banks plan to increase their euro holdings in the next two years, a substantial rise from 7% last year. In the wake of the "Liberation Day Tariff" incident, reserve managers are increasingly viewing the euro as an alternative to the dollar.
Analysts point out that if the current trend continues, the euro could potentially recover to 25% of global reserves by 2030, the level seen before the financial crisis. The eurozone economy's resilience further enhances its appeal as a reserve currency.
The Yuan: The Rising Star of the Next Phase
Although the yuan currently accounts for only 3% of the global reserve system, OMFIF forecasts that this percentage could double to 6% by 2035. A survey shows that over 30% of central banks express interest in increasing their yuan assets within the next decade, as it progressively becomes an indispensable part of a diversified reserve system.
The yuan's rise is tied to China's ongoing expansion in global trade, investment, and financial systems. The Chinese government is promoting the use of the yuan for cross-border settlements, laying the groundwork for it to become a global reserve currency. However, as former PBOC Governor Zhou Xiaochuan points out, achieving widespread internationalization requires ongoing improvements in capital market openness and policy transparency.
Geopolitical Catalysts for Global "De-Dollarization"
The "Liberation Day Tariff" policy of 2025 acts as a catalyst for many central banks to reassess their dependence on the dollar. OMFIF data shows that 70% of central banks express concern over U.S. political uncertainty, viewing it as a reason to reduce dollar holdings, double the percentage from last year.
Max Castelli, Head of Strategy at UBS Asset Management, notes, "Never before in my career have central banks questioned the dollar's status as a safe-haven currency so frequently." This reflects the current international monetary system standing at a pivotal point of deep transformation.
The Ongoing Redrawing of the Global Financial Map
As the global economic balance shifts and emerging market forces rise, the trend towards a "multipolar" financial landscape is increasingly evident. The dollar is no longer the sole anchor of trust, as gold's resurgence, the euro's rebound, and the yuan's growth collectively reshape the global reserve structure. The next era of the global financial order may quietly unfold amidst the wave of "de-dollarization."
