Dollar Still Dominates Global Reserves Despite Diversification Efforts

Central banks have been signaling their intention to diversify away from the US dollar for years, but reserve data shows little progress towards that goal. The dollar's share of global foreign-exchange reserves rose to 57.13 per cent in the first quarter of 2026, up from 56.42 per cent the prior quarter.

The rest of the basket undercuts the diversification narrative. The euro held 20.03 per cent of reserves that quarter, the yen 5.44 per cent, and the renminbi just 1.99 per cent. Every other currency combined made up only 6.18 per cent.

Central banks are not trying to make a political statement by diversifying their assets; they need working capital to intervene in currency markets, meet external obligations, and absorb shocks without moving prices against whoever is buying or selling.

The US Treasury market remains the deepest of its kind in any currency. Redirecting even a modest share of $7.5 trillion in reserves would require an alternative able to absorb that scale without moving the very prices being hedged.