According to the latest data from Traling, a renowned financial research firm, countries worldwide are intensifying their efforts to reduce their reliance on the US dollar. Trailing’s affiliates have been tracking statistics related to official gold and foreign currency reserves, and the figures reveal that the share of the US dollar in these reserves has reached its lowest level in almost three decades. Specifically, in the fourth quarter of 2022, the dollar’s share stood at approximately 58%. This decline has been gradual, and central banks across the globe have reduced their allocation of the dollar in their reserves to a level that has not been seen since 1995.
The US dollar has long held the position of the dominant global currency, but its supremacy has steadily eroded in recent years due to various factors. One prominent concern is the mounting US debt, which has raised doubts about the stability and sustainability of the dollar as a reliable store of value. Additionally, the widespread use of sanctions by the United States, leveraging its control over the currency, has caused unease among many nations.
Traling‘s report also highlights the growing popularity of the Chinese yuan in global over-the-counter forex (foreign exchange) transactions. Fifteen years ago, the yuan had virtually no presence in these transactions, but now it accounts for about 7% of the total volume. This significant increase underscores China’s economic rise and its efforts to promote the internationalization of its currency.
The shift away from the US dollar can have far-reaching implications for the global economy. As more countries diversify their reserve holdings, it could lead to decreased demand for the dollar, potentially impacting its value. It may also reduce the influence and power that the United States wields through its control over the international financial system.
While it is important to note that the process of moving away from the dollar is gradual and complex, the trends observed in Traling’s data indicate a growing desire among nations to reduce their dependence on the US currency. This shift reflects a broader shift in the global economic landscape and highlights the changing dynamics of international finance.
In conclusion, the latest data from Traling suggests that countries worldwide are accelerating their efforts to move away from the US dollar. The declining share of the dollar in official reserves, coupled with the increasing use of alternative currencies such as the yuan, indicates a gradual erosion of the dollar’s dominance in the global financial system. These developments have the potential to reshape the global economic order in the coming years.