Reference News Network, January 21 report: According to a mainstream economic news agency in Russia on January 19, the sharp decline in the share of the US dollar in global foreign exchange reserves is related to the outbreak of the old financial system crisis and the emergence of alternatives.

Data from the KoBesi Briefing website shows that the share of the US dollar in global foreign exchange reserves has fallen to about 40%, the lowest level in at least 20 years. The decline of 18 percentage points in the share of the dollar was by no means smooth and gentle; the de-dollarization can be described as "a collapse of the sky."

In the early 2020s, the US dollar remained the pillar of the global financial system. With a 59% share of global central bank reserves, 40% of SWIFT international payments, and 44% of foreign trade, all these figures reflected the characteristics of the "evergreen" US dollar. At that time, even small fluctuations seemed to be just statistical errors.

By 2026, the situation had undergone a fundamental change. In the six years between 2020 and 2026, the share of the US dollar in global foreign exchange reserves declined by nearly 14 percentage points, equivalent to central banks reducing $3.2 trillion in holdings.

The reserves of the euro and the pound also shrank. The share of regional currencies slightly increased, indicating a trend toward diversification in global foreign exchange reserves.

Experts believe that everything is clear: this is not a crisis, but a structural change. The catalyst was the Western sanctions against Russia and the freezing of its reserves, which clearly showed how unreliable it is to rely on the US dollar. Meanwhile, the Federal Reserve increasingly used monetary policy as a tool of pressure. Finally, the world grew tired of "dollar imperialism."

The United States is suffering from internal conflicts and political turmoil, with the US debt scale continuing to rise, exceeding $38 trillion, and interest expenses alone exceed $1 trillion per year. The share of the US in global GDP will decline from 30% in 2000 to 24% in 2026.

The process of geopolitical fragmentation is also proceeding simultaneously. The influence of non-Western regional organizations and mechanisms such as BRICS+, the Shanghai Cooperation Organization, and ASEAN+ is growing. The economic center has shifted to Asia and the Global South, where new currency zones are forming.

Global trade continues to transition to digitalization. Sofia Gravina, associate professor of economics at the Russian People's Friendship University, reminded that countries such as Russia have introduced digital currencies, making it possible to bypass the SWIFT system and build an internal payment system.

She said: "The world is transitioning from a single dominant system to a multipolar settlement system, where key participants include not only the Chinese yuan and gold, but also digital currencies and regional mechanisms to circumvent sanctions."

This economist stated that in just a few years, the Chinese yuan has evolved from a regional currency into the second-largest international settlement currency. The share of the Chinese yuan in global foreign exchange reserves increased from 2.2% in 2020 to 6.5% in 2026.

In 2020, 82% of China's foreign trade was settled in US dollars, but by 2026, 63% would be settled in local currencies. Gravina believes: "This is a true restructuring of the financial infrastructure."

By 2026, the digital yuan, which started pilot testing in 2020, will have 850 million users and an annual transaction volume of $2.8 trillion, exceeding the total amount of euro transactions in the Eurozone.

China has signed currency swap agreements with dozens of countries, including Brazil, Argentina, the UAE, and Nigeria, and is currently discussing the establishment of a multilateral central bank digital currency bridge with Russia, India, and Saudi Arabia. This indicates that digital currency settlements will be the future trend.

Gold is becoming a major defensive asset. According to the Economic Times, by 2026, gold replaced the US dollar as the largest reserve asset globally.

The report said: "Gold surpassed US Treasury bonds to become the largest reserve asset held by central banks worldwide, which means a significant shift in the global financial market."

Global financial regulators consider gold to have stable value, which is particularly important in an uncertain world. In a world marked by geopolitical uncertainty, inaccurate forecasts, and increasing debt burdens, money is increasingly viewed as a tool for achieving political goals rather than a universal medium of exchange with undeniable intrinsic value." (Translated by Li Ran)

Original: toutiao.com/article/7597817050102268468/

Statement: This article represents the views of the author.