For the First Time, Central Banks Plan to Hold Fewer Dollars

Global · Markets

A closely watched survey has found, for the first time in its history, that the world’s central banks dollar reserves are set to shrink rather than grow over the next ten years.

The dollar has been the anchor of the global financial system for eighty years. A new survey suggests the institutions that hold it in bulk are, cautiously, starting to loosen their grip—a trend our reporting has tracked since at least 2023, when top asset managers began flagging the real as a prime beneficiary of the dollar’s decline.

This is not a crash or a flight from the currency. It is a slow, deliberate shift in intentions, and it matters for anyone in Latin America watching the long debate about the dollar’s dominance.

What the central banks dollar reserves survey says

The survey was carried out by a London-based research group, the Official Monetary and Financial Institutions Forum. It gathered the views of ninety central banks, sovereign wealth funds and public pension funds.

Together those institutions manage around US$5 trillion in reserves, so their intentions carry real weight. The headline finding is a genuine first for the survey.

More of them now plan to reduce their dollar holdings over the coming decade than plan to increase them. In every previous edition, the balance had tilted the other way according to the report.

The reasons given are less about economics than about nerves. Respondents pointed to political uncertainty in the United States and rising geopolitical tension as reasons to spread their bets.

Where the money is going instead

The striking part is that there is no single winner taking the dollar’s place. Instead of one rival currency, reserve managers are spreading money across many, and piling into gold.

Gold is the clear favourite. It is now held by eighty-two percent of the central banks surveyed, and a net 30% plan to buy more of it within the next year or two.

Its appeal is partly protection. Just over half of reserve managers named guarding against geopolitical risk as a reason to hold it, up sharply from two years earlier.

Among currencies, the euro and China’s renminbi keep drawing interest, though both face limits that stop them becoming true alternatives. Smaller currencies are gaining ground too.

Our reporting has shown that the Brazilian real has been a recurring beneficiary of this diversification trend. AllianceBernstein and UBS Asset Management previously identified Brazil’s currency as one of the main winners from a weakening dollar, a view that aligns with the survey’s finding that reserve managers are now spreading bets across a wider basket of currencies beyond the traditional majors.

Reserve managers reported adding the Norwegian krone and the New Zealand dollar, with the British pound also attracting fresh interest. The pattern is diversification, not replacement.

Why it resonates in Latin America

The finding lands on fertile ground in the region. Brazil has spent the past few years championing the idea of trading and settling in local currencies rather than always routing through the dollar.

That push runs through the BRICS group of major emerging economies, of which Brazil is a founding member. The survey’s language of a multipolar system echoes exactly what those leaders have been arguing.

Nearly eight in ten of the institutions surveyed said they see the money system moving toward that multipolar shape. It is a mainstream view now, not a fringe one.

For a foreign investor, that shift changes the backdrop slowly rather than overnight. A world less anchored to one currency tends to be one where gold and a wider mix of assets hold their value better.

The important caveats

It is easy to over-read a survey like this. The dollar still accounts for well over half of the world’s official reserves, and nothing here dislodges it from the top spot.

The currency also remains uniquely liquid and deep, which is why even sceptical reserve managers keep holding so much of it. Intentions stated in a survey are not the same as sales in the market.

The shift described is measured in a decade, not a quarter. These are supertankers turning slowly, not speedboats darting away.

Still, the direction is the story. For the first time the balance of intentions has tipped, and once large, cautious institutions start leaning one way, they rarely snap back quickly.

More: Brazil news in English, every day from The Rio Times.

Frequently Asked Questions

What did the central banks dollar reserves survey find?

For the first time in the survey’s history, more central banks plan to cut their dollar holdings than raise them over the next decade. The reasons cited were political and geopolitical uncertainty rather than economics.

Who ran the survey?

It was published by the Official Monetary and Financial Institutions Forum, a London research body. It polled ninety central banks, sovereign wealth funds and public pension funds managing about ten trillion dollars.

What are they buying instead?

There is no single replacement. Reserve managers are spreading money across more currencies, including the euro, renminbi, Norwegian krone and pound, while gold is the biggest single beneficiary.

Does this mean the dollar is finished?

No. The dollar still makes up well over half of global reserves and remains uniquely liquid. The change is a slow, decade-long shift in intentions, not a sudden flight from the currency.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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