Dollar's Reserve Share Decline Driven by Handful of Large Holders

Veteran economist Mohamed El-Erian highlighted the decline of the dollar's share in global reserves, but notes it's not a broad shift away from the currency.

According to research by the New York Fed, the fall in the dollar's share from 64% in 2015 to 56% in 2025 is largely driven by the actions of just four large reserve holders: China, Russia, Mexico, and Morocco.

The decline is not a result of countries selling dollar assets and buying other currencies, but rather because these large reserve holders are expanding their reserves, which mechanically pulls down the global aggregate share without reducing their own allocation to dollars.

El-Erian pointed out that it's interesting to see how this trend evolves by year-end. The U.S. Dollar Index has fallen 0.97% over the past month but is up 0.98% year-to-date and 0.97% over the past year, according to TradingView.

The dollar still accounts for the vast majority of global trade invoicing, cross-border lending, and foreign exchange trading volume.