End of an era? BCs plan to sell dollars and increase bets on gold

For the first time, more central banks plan to reduce their dollar reserves than increase them over the next decade, according to a global survey, reflecting an increase in political risk associated with the US currency.

The results come amid a war in the Middle East partially started by the United States, which has shaken global energy markets, while US President Donald Trump seeks new ways to impose tariffs, highlighting the country's increasingly unpredictable foreign policy agenda.

The survey was carried out by OMFIF (Official Monetary and Financial Institutions Forum), an independent research group based in London, conducted between March and May, and includes responses from 74 central banks around the world.

This is the first time the survey records a desire to reduce dollar allocations exceeding the intention to increase them since it began recording central banks' investment intentions in 2023.

The results represent the latest indication of a global shift away from the dollar, often called "de-dollarization," which implies a reduction in the use of the U.S. currency in global trade and financial transactions, decreasing demand for the currency and its value.

The U.S. dollar's share of central banks' foreign exchange reserves fell to the lowest level in two decades last year, according to JPMorgan.

"This year, geopolitics overtook the American political environment as a factor discouraging investment in the dollar, reflecting the perceived role of the US in increasing geopolitical risk," concluded the OMFIF report.

The document noted, however, that the dollar "still dominates portfolios and is expected to do so for the foreseeable future."

The dollar has held around 58% of central bank allocations over the past five years, OMFIF head of research Andrea Correa told CNN.

Still, a "gradual" de-dollarization is leading central banks to move to the euro and renminbi, according to the report.

Almost all central banks surveyed believe the renminbi offers diversification, while two-thirds said the euro has become more attractive for use in global trade, up from 43% last year.

Twenty-nine percent of respondents indicated a desire to increase euro reserves in the long term, up from 22% last year.

International debt denominated in euros reached record levels in 2025 and the euro became the main currency in green bonds, said Karsten Stroborn, director general of markets at Germany's central bank, in text published in the report.

Demand for alternative currencies, including the Singapore dollar, South Korean won and South African rand, is also growing. Meanwhile, rising geopolitical risk is driving demand for gold.

A record number of central banks said they plan to increase investment in gold, even as prices have risen more than 20% from the previous year.

The change was "driven by protection against geopolitical risk and growing doubts about the stability of the international monetary system", according to the report.

Gold "has come to occupy the center" of countries' asset reserve management strategies, the document added. About 51% of central banks cited protection against geopolitical risk, an increase of 11% from 2024.

Source: CNN