Survey of 90 institutions managing $10 trillion shows majority expect to cut dollar holdings over next decade amid rising political risks.
A majority of central banks intend to reduce dollar reserves for the first time in history, citing increased political risks tied to the U.S. currency. The shift was revealed in a survey by the Official Monetary and Financial Institutions Forum, which tracks public investors overseeing $10 trillion in assets.
The survey marks the first instance where more institutions plan to decrease rather than increase dollar allocations. Previous reports showed steady or growing dollar demand, but geopolitical tensions and U.S. policy uncertainty have altered sentiment. Gold and artificial intelligence tools are emerging as preferred alternatives for managing volatility.
Despite the dollar’s 3% rally this year, driven by higher U.S. interest rates and safe-haven demand, 79% of central banks and 60% of public funds anticipate a decline in its global role. No single currency is seen as a clear replacement yet.