International institutions are reducing dependence on the US dollar

The global financial system is undergoing a significant transformation. International institutions are actively changing their approach to reserve management, aiming to reduce dependence on a single currency. This process reflects a broader trend of rethinking the role of the US dollar in the world economy.

The History of the Dollar’s Decline in Reserves

Over the past two decades, a dramatic shift has occurred. In 2001, the US dollar accounted for 65% of global foreign exchange reserves, but today it has decreased to 40%. This 25 percentage point difference is not just a number — it demonstrates a fundamental reassessment by international institutions of the US’s role in the global financial architecture.

According to reports from PANews and analysis by Cointelegraph, this decline in share is not a random fluctuation but part of a sustained long-term trend. Institutions — central banks, international funds, sovereign wealth funds — are consciously diversifying their reserves.

Who Is Behind This Transformation

The main actors in this process are the world’s central banks and major governments managing billions of dollars in foreign exchange reserves. These institutions are revisiting the traditional approach, where the US dollar was virtually the only safe asset for long-term accumulation.

China, Russia, the UAE, and other countries are actively reducing their dollar holdings. Large international organizations are also beginning to seek alternatives, understanding the risks of over-concentration in one currency.

Alternative Assets for International Reserves

The vacated space is not left empty. Global-scale institutions are distributing reserves across several directions. Gold, the Japanese yen, the Chinese yuan, the euro, and other currencies are gaining a larger share in portfolios.

Some institutions are considering near-future possibilities: digital assets, cryptocurrencies, and central bank digital currencies (CBDCs) under development could potentially become part of international reserves. Although this remains more of a hypothesis than reality for now, the trend clearly indicates a search for more flexible tools.

Geopolitical Factors of Influence

In short, the dollar’s dominance for decades was based on political stability and US military strength. However, in a world where the center of economic power is shifting, institutions are adapting to the new reality. US sanctions against certain countries, macroeconomic instability, and growing alternatives create incentives for diversification.

The truth is: global institutions no longer consider the dollar the sole undisputed reserve asset. This trend is deep, persistent, and transforming the foundations of the international monetary system.