Last week, the news emerged that gold has overtaken US government bonds as the world’s official top reserve asset. Gold is in the midst of a historic rally that led to a doubling of its price over the past two years. This has been partly the result of central banks having aggressively accumulated gold and diversified into other currencies over the last few years. At the end of 2025, gold accounted for 27% of all central bank reserve assets at the global level, up from 20%, according to a report on the international role of the euro published by the European Central Bank. US Treasuries fell to 22% from 25% over the same period, while the share of euro-denominated reserve assets was unchanged at 15%.
Similar reports have been issued by other organisations and news agencies. For example, Bloomberg has recently shown how the US Dollar now represents around 46% of global FX and gold reserves, the lowest share in at least 26 years, with a 15% loss since 2017. Excluding gold, the US Dollar still makes up 57% of global reserve currencies, but this figure is the lowest since 1994, according to IMF data. The last time the US Dollar fell below 50% of global reserves was in 1990-1991, a period marked by elevated inflation, a recession, an oil shock from the Gulf, and a crisis of confidence in the US economy.
If that wasn’t enough, other damning reports show that China’s total cross-border receipts and payments by settlement currency saw the RMB surpass the USD three years ago, and has remained stable since. In fact, in March 2023 the RMB share of China’s settlements surpassed the USD for the first time, and as of March 2024 about 52.9% of Chinese payments were settled in RMB, versus 42.8% in USD. That gap has held roughly stable since.
All these reports have reignited the debate over whether the role of the dollar as the key reserve asset has entered its final phase. The FT recently commented that “the dollar’s decline is overstated — but still real”. Let’s have a look at various metrics to assess where we are on this issue.
First of all, the ECB report itself shows that the USD remains the first currency in terms of FX reserves (excluding gold), outstanding international debt, loans and deposits, and FX turnover. Other reports show that the dollar is the world’s vehicle currency; the world’s funding currency, and – despite some erosion – is still the world’s dominant reserve currency. Additional reports show that the US still has the largest share in export invoicing and the share of FX transactions.
Regarding China’s invoicing in RMB, the figure reported above includes all cross-border flows—current account plus capital account combined, i.e. financial flows: portfolio investment through Bond Connect and Stock Connect, panda bond issuance, offshore RMB lending all are taken into account. Once we isolate trade, the pure goods-trade invoicing share for the RMB still sits materially lower (broadly a quarter to a third in most estimates), with the USD still the larger share of China’s actual import/export invoicing.
Finally, according to the Bank for International Settlements, offshore dollar liabilities booked by banks outside the US amounted to $14tn at the end of last year, up from $5tn in 2000, with euro liabilities only doubling to about $3tn over the same period. As the FT says, “the most reliable measure of dollar dominance is probably the loans and other dollar obligations created outside the US, which the Federal Reserve backs with giant swap lines to foreign central banks.”
In our view, as we discussed at length in the book “Smart Money,” the real challenge to the USD will come from the digital yuan, the e-CNY, which is part of the integrated system of the Belt and Road Initiative, Digital Silk Road and China’s export of electricity grid as part of the “Electrostate as a Service.”
The FT itself concludes with the following sentence: When that trust breaks down, then the dollar’s supremacy will too. In the meantime, shifts in global reserves function more as a reminder that what was once an “if” is now undoubtedly a “when”.
