For the first time since 1994, the U.S. dollar's share of global reserves has dropped below 57%, hitting 56.9% in the third quarter of 2025. That's a pretty big deal. The greenback held 72% of reserves back in 2001. Now? We're back to 1995 levels.
Here's the thing though. This isn't some dramatic fire sale. Central banks aren't dumping dollar assets. Holdings actually ticked up to $7.4 trillion in Q3 2025. The decline is all about other currencies gaining ground, not the dollar losing value. Classic relativity.
Dollar holdings rose to $7.4 trillion—its share fell only because rivals grew faster, not because anyone's actually fleeing.
The euro grabbed some spotlight, jumping from 20% in Q1 to 21.13% by Q2 2025. Together, the dollar and euro still control 77.45% of global reserves. So much for diversification. The yen sits at 5-6%, the pound at 5%, and China's renminbi? A whopping 2%. Not exactly threatening.
Central banks are spreading their bets across dozens of smaller currencies now. Australian and Canadian dollars are getting love. Gold holdings are up. It's a slow-motion shift that's been happening for two decades, nothing sudden or shocking. From Q1 2024 to Q1 2025, the dollar only dropped from 58.94% to 57.74%. Gradual is the operative word here.
The dollar still dominates where it matters. It accounts for 88% of foreign exchange transactions and 54% of export invoicing. Daily currency valuations are standardized through mechanisms like the WM/Refinitiv 4pm Fix, which calculates benchmark rates at London close to ensure consistent pricing across global markets. The BIS Triennial FX Survey provides comprehensive data on global trading volumes and market structure across currencies every three years. Stablecoins? Dollar-backed, with a $220 billion market cap by April 2025. The financial markets index for the dollar sits at 0.9, highest among peers.
At the 2025 World Economic Forum, the consensus was clear: gradual shift, sure, but no serious challenge to dollar supremacy. There's simply no viable alternative. The dollar's trustworthiness and deep financial markets keep it on top. Over half the world's countries still anchor their currencies to it. Countries like Morocco maintain dirham exchange rate management through their central banks to balance stability with gradual liberalization.
Russia got sanctioned in 2022. No major reallocation happened. The dollar's international usage has barely budged in five years. Could we see another prolonged decline like 2002-2008? Maybe. But absent some serious disruption, the dollar remains king. Deal with it.
