US Dollar as a Global Reserve Currency: 2025 Overview

Explore the 2025 status of the US dollar as the world’s leading reserve currency—its dominance, challenges from emerging currencies, and future outlook in a shifting global economy.

Current Status and Trends:

The US dollar remains the world’s dominant reserve currency, but its share of global foreign exchange reserves has been gradually declining over the past decade. As of the end of 2024, the dollar accounted for about 58% of global reserves, down from 65% a decade earlier.. This slow erosion reflects a trend of diversification by central banks, but the dollar is still far ahead of its nearest competitors.

Comparative Reserve Currency Shares:

From the most recent data from the IMF's COFER (Currency Composition of Official Foreign Exchange Reserves):

-US Dollar: 58% of global reserves (2024), down from 65% (2014)1.

-Euro: Roughly 20% of global reserves, having peaked at 25% in 20062.

-Japanese Yen: 5.8%,-British Pound: 5%, -Chinese Yuan: 2.2%, -Others (Canadian, Australian dollars, Swiss franc, etc.): Each under 3%..

Recent Developments (2024–2025): The US dollar has weakened notably in 2025, falling 9% against major currencies like the euro and sterling, due to trade tensions, shifting growth expectations, and US policy uncertainty..

The decline in the dollar's share of reserves has not been matched by a corresponding increase in any single alternative currency. Instead, there is a gradual diversification into a broader basket of currencies and, to a lesser extent, gold and other assets.

Despite these changes, the dollar remains central to international trade, commodity pricing, and debt issuance. It is involved in about 90% of foreign currency trades and underpins roughly half of global trade invoices and international loans..

Drivers of Change

-Geopolitical Tensions: Sanctions and the weaponization of the dollar (notably after the 2022 Russia-Ukraine war) have incentivized some countries to diversify their reserves.

-Deglobalization and Economic Fragmentation: Some countries are exploring alternatives due to concerns about US policy unpredictability and the desire for greater financial autonomy.

-Lack of Alternatives: Despite the decline, no other currency offers the same combination of liquidity, market depth, and global trust as the US dollar..

Major Holders of Reserves

-China: US$3.285 trillion. (May 2025) and Japan: $1.3 trillion (Dec.2024)

-Switzerland, Russia, India: Each with hundreds of billions in reserves.- Many countries, especially those with large trade surpluses, continue to hold significant portions of their reserves in US dollars.

Comparison: 5–10 Years ago vs. today

The US dollar’s share has dropped by about 7 percentage points over the last decade. The Euro’s share has remained relatively stable, with minor fluctuations.  While the Chinese Yuan’s share has grown modestly, it remains small. Other currencies have seen only incremental gains.

Outlook:

While the US dollar’s dominance as a reserve currency is being slowly chipped away, it remains unchallenged at the top. The diversification trend is likely to continue, driven by geopolitical and economic factors, but a major shift away from the dollar appears unlikely in the near term due to the absence of a viable alternative and the continued strength of US financial markets.

In summary, the US dollar’s global reserve currency status has weakened slightly over the past 5–10 years, with its share of global reserves falling from 65% to 58%. However, it remains the world’s preeminent reserve currency by a wide margin, and no other currency is poised to replace it in the foreseeable future.

In essence, while the US dollar's position as the world's primary reserve currency is being tested and its share has seen a decline over the last decade, it maintains a strong structural advantage due to the deep and liquid nature of US financial markets and its pervasive use in global trade and finance. The ongoing "de-dollarization" efforts are more of a gradual diversification towards a more multipolar currency system rather than an imminent dethroning of the greenback

SP 

"For information only and not a recommendation to buy or sell shares."

Mining News: www.minestockers.com-- (Disclosure, writer is a shareholder of minestockers.com




Comments

Post a Comment

Popular posts from this blog

Are We Witnessing the Seeds of Revolution?

Image
 Historical and economic lens on today’s rising inequality, taxation, and trade tensions—examining whether current conditions echo the unrest that sparked revolutions of the past.   Tariffs, Tax Policy, and America’s Growing Divide As 2025 unfolds, a cascade of economic changes is reshaping the American landscape, raising questions about the nation’s social stability and the potential for upheaval. With new tariffs driving up consumer prices and tax policies favoring the wealthy, the United States is experiencing a widening divide between the “haves” and “have-nots.” Are these the seeds of revolution, or simply the latest chapter in the country’s long history of economic cycles? Tariffs and Consumer Prices: The New Tax on Households President Trump’s renewed tariffs in 2025 have quickly made their presence felt in American wallets. According to the Yale Budget Lab , the average U.S. household is experiencing an effective income loss of around $2,000 in 2025 due to the...
Read more

CARBON CAPTURE & STORAGE (CCS)

Image
 Climate change remains a defining challenge of our time, and mitigating its effects requires innovative technology and considerable effort. Carbon capture and storage appears as a promising means to reduce greenhouse gas emissions significantly. Let's look at the overall function and potential of carbon capture technology, along with introducing two landmark projects that are set as new milestones in this crucial field. Carbon Capture and Storage (CCS), as the name suggests, is a technology that seizes carbon dioxide (CO2) emissions from industrial and power generation processes. This method prevents emissions from entering the atmosphere, thus contributing to the fight against climate change. Once captured, the CO2 can either be permanently sequestered underground in geological formations such as depleted oil and gas reservoirs, saline formations and/or unmineable coal seams. Also there is the option of converting CO2 into a range of products such as methanol, which could fu...
Read more

SOME KEY ASPECTS OF TRUMP’s BIG BILL

Image
Explore the downsides of Trump’s Big Bill: Medicaid & food aid cuts, rising deficits, & tax breaks favoring the rich. Learn how it impacts you! The Congressional Budget Office (CBO) estimates the bill will add approximately $3.3 trillion to the federal deficit over the next decade, with some analyses suggesting up to $3.9 trillion   The legislation includes cuts to the Supplemental Nutrition Assistance Program (SNAP) by introducing stricter eligibility and work requirements, potentially reducing access to food assistance for millions of low-income Americans.   According to the CBO, the wealthiest 10% of households would see a 2.3% increase in after-tax income, while the poorest 10% could face a 3.9% decrease due to reduced benefits from programs like Medicaid and SNAP. This makes the bill one of the most regressive pieces of legislation in decades, exacerbating income inequality   A provision in the bill conditions federal broadband funding on states refra...
Read more