In 2024, the dollar’s share of global foreign exchange reserves recently hit its lowest year-end level in history. This shocking statistic is from the International Monetary Fund. At the end of 2022, the dollar was still 57.8% of the world’s total reserves. These reserves equalled a mind-boggling $12.36 trillion. This is a drop of 0.6 percentage points from last year. It marks the beginning of a new era in the global financial architecture.
This decline, while positive, is in many ways long overdue, as the dollar’s supreme dominance has been falling for years. Dollar Share Historically, the dollar’s share reached its maximum of about 70% in 2000. Now, it has fallen to its lowest level since the IMF began collecting this data in 1995. The dollar’s share is continuing to shrink. Countries are increasingly promoting national currencies, thereby diversifying their foreign exchange reserves, and reducing reliance on a single currency.
Several factors contribute to this trend. Countries, including Russia, are pivoting towards alternative assets such as gold, further diminishing the dollar’s status as the primary reserve currency. Their international policy—countries are increasingly favoring gold over the dollar. This trend bodes ill, not only for the future of their foreign reserves management, but as a geopolitical and strategic trend.
Even with this drop, the dollar continues to be the most important part of countries foreign exchange reserves. While the dollar has continued to play a critical role in international trade and finance. Its declining share is a testament to countries’ efforts to lower their vulnerabilities by divesting from reliance on a single asset.
The overall value of foreign exchange reserves around the world has hit $12.36 trillion, highlighting the size of this financial market. Countries are already taking significant first steps to diversify their reserve vehicles. As they increasingly do, the dollar’s falling share is exposing a new playbook for central banks and financial institutions.