Eichengreen Sounds Alarm on Abrupt Dollar Decline

Monetary historian Barry Eichengreen has changed his mind about the pace at which the US dollar could decline. He now worries that confidence in the dollar could be lost abruptly before alternative currencies can fill the void.

Eichengreen, a Berkeley economist and author of a standard history of international monetary systems, made this shift since April 2nd, 2025, Liberation Day. The dollar's share of global reserves has been slipping at about half a percentage point per year, from over 70% in the early 2000s to just under 60% now.

According to Eichengreen and his co-authors' research on annual reports from around 80 central banks, most of the dollar's lost ground has been picked up by non-traditional reserve currencies, such as the Australian, Canadian, Singaporean, and New Zealand dollars, as well as the South Korean won. The euro has gained none of this ground.

Eichengreen attributes the gold buying trend to central banks' structural catch-up rather than a rejection of Washington's policies. However, he notes that recent waves of gold buying may be driven by growing concerns about the dollar's value and unusual US Treasury interventions in the market.