May 10, 2021 - Economy & Business

World's dollar reserves hit 25-year low

Data: International Monetary Fund; Chart: Andrew Witherspoon/Axios
Data: International Monetary Fund; Chart: Andrew Witherspoon/Axios

The percentage of global foreign reserves held in U.S. dollars declined to its lowest point in 25 years during the fourth quarter of 2020.

Why it matters: The U.S. dollar is still the dominant international reserve currency. But the downward shift likely reflects central banks' use of other currencies for international transactions — implying a declining role for the dollar in the global economy, according to the International Monetary Fund.

Details: A newly released IMF survey says the portion of global central bank reserves held in U.S. dollars fell to 59% in Q4, compared with 61% in Q2 2020.

  • The euro share grew to 21.2% from 20.1% over the same period.

What's next: Russia previously said it would shift its reserves away from the dollar. Some expect that emerging market central banks will also do the same — and large shifts could affect global currency and bond markets, the report says.

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