Global Reserves Held In US Dollars Drop To Less Than 50% – Official States It Has Become A ‘Toxic’ Currency – Finance Bitcoin News

The share of reserves held in US dollars by central banks has fallen to less than half of the global total of reserves, according to a note from Eurizon SLJ Asset Management. The note says that the recent sanctions adopted by the United States against the Bank of Russia have weakened confidence in the dollar as a reserve currency.

The central bank’s dollar reserves hit 47% as confidence in the currency erodes

Central banks are beginning to diversify their reserves away from the US dollar. A note issued by Eurizon SLJ Asset Management on April 17 revealed that the percentage of reserves held by central banks in dollars reached 47% during 2022, falling sharply since 2021, when dollars accounted for 55%.

Analysts at the firm explain that this decline in just one year is “exceptional” and marks an acceleration in the predicted rate of erosion of the US dollar.

The reason, the report says, has to do with the broad package of sanctions that the US government imposed on Russia due to its involvement in the current Russia-Ukraine conflict, freezing gold and foreign currency abroad, and putting several key companies on the designated entity list of the Office of Foreign Assets Control (OFAC).

The memo explains that these “exceptional actions” have made other countries less willing to hold their reserves in the form of US dollars.

The dollar has become “toxic”

This de-dollarization trend driven by the so-called “weaponization” of sanctions by the United States government has prompted global blocs such as BRICS and ASEAN to look for alternatives to safely conduct trade among themselves.

BRICS is currently studying an initiative to create a common currency, which will be discussed at the next BRICS summit to be held in South Africa. Similarly, ASEAN countries have called for a reduction in reliance on the dollar and the use of national currencies for international settlements, fearing the application of secondary sanctions.

On April 19, Russian Deputy Foreign Minister Alexander Pankin criticized this “weaponization”, noting that more and more countries were increasing their gold holdings while drawing down their foreign exchange reserves. He stated:

These trends show that the US dollar is getting big, strong, but still toxic to day-to-day operations. It’s not a common trend, but I think it could become a trend.

What do you think about the drop in the global share of reserves held in US dollars? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price spike occurred during December 2017. He has a computer engineering background, lives in Venezuela and is influenced by the cryptocurrency boom on a social level, offering a different point of view on crypto success and how it helps the unbanked and underserved.

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