based on materials from the site - By COINTURK NEWS

A new global survey involving 75 central banks highlights growing doubts about the future of the US dollar in the global economy. This report, prepared by the independent analytical center Official Monetary and Financial Institutions Forum (OMFIF), shows that central banks are beginning to reassess the weight of the dollar in their portfolios.

Dollar Weakening
According to the report, the euro has recently become a competitor to the US dollar, while the Chinese currency, the yuan (or renminbi), is gaining attention in emerging markets. Due to the trend of central banks leaning towards safe-haven assets, the share of the euro and yuan in their portfolios is increasing.

A significant 70% of surveyed central banks view the current political climate in the US as a deterrent to holding dollar assets, a notable increase from 31% last year. Political factors are quickly becoming significant, influencing central bank positions alongside geopolitical events and financial risks in the US.

"Demand for dollars has noticeably decreased among central banks this year. The reasons lie in the political situation, geopolitical tensions, and rising financial risks. More than half of the respondents believe that the privileged status of US markets is coming to an end." (OMFIF Report)

Change in Reserve Currency Status
Although the dollar is still considered a safe and liquid asset, most central banks in the OMFIF survey predict that the dollar's share in global reserves will remain at about 50% in the long term. However, these banks anticipate a gradual diversification of their currency reserves rather than a sudden shift.

Although the dollar's role as an international reserve currency is currently not seen as being under threat, global funds are approaching reserve distribution with caution. In the coming decade, while the dollar is expected to maintain its significance in reserves, currencies like the euro and yuan are expected to gain importance.

"Political changes in the US directly raise doubts about the dollar. 70% of participants stated that the political climate acts as a deterrent to investments in dollars. Trade protectionism (tariffs) and growing geopolitical uncertainty also influence central bank decisions." (Official Representative of the European Central Bank)

Political and Geopolitical Risks
Political events in the US, especially under the Trump administration, have further called into question the image of the dollar as a global safe haven. Concerns about the financial situation in the US and the budget deficit also significantly influence central banks' portfolio management. The survey among central banks highlights that these concerns about US markets are more pronounced compared to the previous year.

Geopolitical tensions and the increased emphasis on trade protectionism raise questions about the future role of the dollar. Consequently, diversification of reserve currency choices among central banks becomes a strategy amid current global uncertainty.

Despite central banks perceiving the dollar as a safe haven, the trend towards increased portfolio diversification is becoming increasingly evident. The interest of emerging markets in alternative currencies like the yuan is drawing attention in international financial markets.

The study shows that while the US dollar still holds a significant share in global reserves, current geopolitical and economic events may lead to diversified strategies for managing central banks' reserves. Most central banks have begun to lean towards other currencies instead of the dollar under the influence of the existing political landscape and economic risks. The long-term dominance of the US dollar is not expected to end anytime soon, but a cautious approach to managing currency reserves remains crucial for global financial stability.

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