Dollar Decline Not Due to Widespread De-Dollarization, NY Fed Study Finds

The Federal Reserve Bank of New York has released a study on the global shift in foreign-exchange reserves, challenging the notion that countries are broadly abandoning the US dollar. According to the research, the decline in the dollar's share of official currency reserves from 64% a decade ago to 56% last year is largely due to moves by a small number of reserve managers.

The study found that roughly equal numbers of countries had increased and decreased their dollar holdings during two separate periods since 2015, suggesting that de-dollarization may not be as widespread as thought. The findings come at a time when many have cited the decline in the dollar's share as evidence of a broader shift away from the currency.

The study did not find evidence to support the claim that countries are broadly abandoning the US dollar. Instead, it suggests that reserve managers are making tactical decisions about their currency holdings, which can vary over time.