Global Reserves Held in US Dollars Have Fallen to Less than 50% of Official States, They Have Become a ‘Toxic’ Currency CryptoGlobe

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The percentage of reserves held in US dollars by central banks has fallen to less than half of the world’s total reserves, according to a note from Eurizon SLJ Asset Management. The note indicates that the recent sanctions decreed by the United States against the Bank of Russia have eroded confidence in the dollar as a reserve currency.

Central bank dollar reserves hit 47% as confidence in currency erodes

Central banks are beginning to diversify their reserves away from the US dollar. A note issued by Eurizon SLJ Asset Management on April 17 revealed that the percentage of reserves that central banks held in dollars reached 47% in 2022, down sharply from 2021, when the dollar was 55%.

The firm’s analysts explain that this drop in just one year is “exceptional” and marks an acceleration of the expected rate of erosion of the US dollar.

The cause, according to the report, is related to the extensive set of sanctions that the US government has applied to Russia due to its involvement in the current Russian-Ukrainian conflict, the freezing of its gold and foreign currency assets at the abroad and the control of several key companies. Office of Foreign Assets Control (OFAC) Designated Entity List.

The note explains that these “exceptional actions” have made other countries less willing to hold their reserves in the form of US dollars.

The dollar has become “toxic”

This de-dollarization trend, fueled by the so-called “weaponization” of sanctions by the US government, is driving global blocs like BRICS and ASEAN to look for alternatives to trade safely with each other.

The BRICS are currently studying an initiative to create a common currency, which will be discussed at the next BRICS summit to be held in South Africa. Similarly, ASEAN countries have called for reducing dependence on the dollar and the use of national currencies for international settlements, fearing the application of secondary sanctions.

On April 19, Russian Deputy Foreign Minister Alexander Pankin criticized this “militarization,” noting that more and more countries were increasing their gold holdings while decreasing their foreign currency reserves. He stated:

These trends show that the US dollar is getting big, strong, but still toxic to day-to-day trading. It’s not a mainstream trend, but I believe it could become a trend.

What do you think of the decline in the global percentage of reserves held in US dollars? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late in the game, entering the cryptosphere when the price spike happened in December 2017. Having a background in computer engineering, living in Venezuela and impacted by the cryptocurrency boom at the social, it offers a different point of view. on the success of crypto and how it helps the unbanked and underserved.

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