Survey Finds Central Banks Plan to Reduce Dollar Holdings

More central banks expect to reduce their allocations to the U.S. dollar than increase them over the next decade as political risks associated with the currency continue to grow, according to a survey released by the Official Monetary and Financial Institutions Forum (OMFIF).

Central banks are reassessing reserve portfolios as geopolitical risks fuel debate over the future role of the U.S. dollar.

Reuters reported that the survey marks the first time OMFIF has found a net shift away from the U.S. dollar among public-sector investors.

The findings add to the ongoing debate over the dollar's role as the world's primary reserve currency amid heightened geopolitical tensions and uncertainty surrounding U.S. policies.

The London-based think tank also found growing interest among the 90 central banks, sovereign wealth funds, and public pension funds surveyed in expanding the use of artificial intelligence.

According to the survey, 79 percent of central banks and 60 percent of public funds believe the global monetary system is moving toward a more multipolar structure.

Respondents, who collectively oversee about $10 trillion in assets, increasingly viewed market volatility as a permanent feature and are testing new approaches, including AI-powered investment analysis.

"There is no clear alternative to the dollar," OMFIF Senior Economist Yara Aziz wrote, noting that the currency has risen about 3 percent this year, supported by higher

U.S. interest rates, continued demand for U.S. assets, and safe-haven buying amid the U.S.-Iran conflict.