De-Dollarization to Continue, Warns CICC Chief Economist Miao Yanliang

De-dollarization is far from over, according to Miao Yanliang, Chief Economist at China International Capital Corp (CICC). In a recent article in the Financial Times, he warned that the US dollar's dominance is being chipped away by long-term diversification efforts. The economist pointed out that the faltering US Treasuries, which have sustained the dollar's international role for decades, are now under scrutiny due to rising national debt.

The rising use of financial measures such as sanctions has also led some institutions to reconsider their reliance on Treasuries. Reserve managers are increasingly looking at alternative stores of value and currencies, with some even turning to gold and local currencies. Miao Yanliang emphasized that de-dollarization is a long-term trend, and the US dollar will not be spared in the global currency markets.

The recent rise in the US dollar's share of global foreign exchange does not imply a reversal of this trend, according to Miao. Instead, it reflects short-term market fluctuations, while diversification efforts continue to gain momentum. The economist cautioned that central banks are still considering de-dollarization, as they seek to protect their reserves from the US dollar's downward pressure.