Dollar's Share of Global Forex Reserves Falls to Lowest Level This Century
The dollar's share of global official foreign exchange reserves has fallen to its lowest level this century, as countries continue to reduce their dollar exposure.
According to the latest IMF COFER data, the dollar's reserve share dropped to 56.77% in Q4 2025, continuing its decline from the previous quarter, as central banks diversify by increasing holdings in other currencies and gold.
Market Mechanism: Global central banks are reducing dollar assets or slowing their accumulation while increasing allocations to euros, renminbi, gold, etc., driven by events that promote de-dollarization, leading to a flow of funds into non-dollar reserve assets; the U.S. Treasury market holding dollar assets is under pressure, benefiting non-dollar currency issuing countries and gold producers/holders.
Source: Public Information
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The Federal Reserve and the U.S. Treasury have maintained the dollar's reserve status over the past twenty years through QE and high deficits, but since the 2014 Russia incident, many central banks have accelerated diversification. Between 2018 and 2025, countries like China, India, and Poland have continuously increased their gold holdings by over 1,000 tons per year while promoting bilateral trade in local currencies, with the dollar's share gradually declining from about 71% in 2000.
In terms of capital allocation, central banks are primarily directing new reserves into eurozone bonds, renminbi assets, and physical gold, motivated by the need to avoid geopolitical risks and sanctions exposure associated with a single currency, while hedging against long-term dollar depreciation pressure, resulting in a "reserve basket rebalancing" rather than a large-scale sell-off of dollar assets.
Similar cases include the decline of the dollar's share after the 1970s decoupling from the Bretton Woods system and the temporary diversion during the early days of the euro; the current global reserve system is slowly transitioning from a dollar-dominated unipolarity to a multipolarity.
Structural Judgment: This essentially reflects a capital concentration driven by regulatory changes. The increased risks of geopolitical sanctions and currency weaponization elevate external constraints, forcing central banks to shift reserve pricing power from dollar-denominated treasury bonds to diversified asset portfolios. The mechanism involves diversifying sovereign credit to reduce exposure to policy risks of a single issuing country, accelerating the long-term reallocation of global capital from dollar-denominated assets to gold and other currency-denominated assets.
ABAB News · Cognitive Law
The more a single currency is weaponized, the more reserves are diversified.
The more diversified the reserve basket, the higher the cost of hegemony.
A slow loss is harder to reverse than a sudden collapse.