A new post from the Federal Reserve Bank of New York, written last week by Linda S. Goldberg and Sneha Parthasarathy, pushes back on the popular de-dollarization storyline. They write, "There is little evidence of a widespread official diversification away from dollars," warning that averages can mislead: "Aggregate statistics can create misleading impressions of broad trends when they actually reflect the concentrated actions of a few large players." Since 2015, across two distinct spans, about as many countries increased their dollar holdings as cut them.
Between 2015 and 2019, the bulk of the active shifts out of dollars came from China and Russia. In the 2019 to 2023 period, China, Russia, Mexico, and Morocco drove much of the further decline. In short, a few big balance sheets did most of the heavy lifting.
Outside those heavyweights, changes mostly reflected local needs: access to dollar liquidity, exchange rate management, and building insurance against funding shocks. As the authors put it, "These drivers still retain their strength." They add, "The reserve change channel reflects a rotating group of countries responding to idiosyncratic reserve management needs rather than systematic dollar avoidance."
Two other data points round out the picture. In January, the IMF reported the dollar's share of global reserves was the lowest since 1995, a slide it attributed to a weaker greenback rather than outright reductions in holdings. Additionally, a different report published in June found that, over the long term, most global central banks intended to scale back their exposure to the US currency.
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Put together, the story looks less like a stampede and more like a few large players repositioning while others adjust for practical reasons. For your money, this argues for watching policy moves by the biggest reserve holders as closely as the headline percentages.
