De-Dollarization Moving Central Banks To Other Assets: BlackRock

Cointelegraph has shared a BlackRock report that highlights how de-dollarization is pushing central bank reserves to other assets. The graph shows that US dollar reserves for global central banks have seen a steady decline since 1998. On the other hand, central banks seem to have significantly increased their gold reserves and other currencies. The report states that central banks are “diversifying beyond the dollar, leading to a rise in other currency reserves, gold holdings, and consideration for emerging assets like Bitcoin.“

BlackRock’s Stance On De-Dollarization

The report shared by Cointelegraph is not the first instance of BlackRock’s cautious stance on the fading luster of the US dollar. In a letter to shareholders, Larry Fink, CEO of the world’s largest asset manager, stated how the US dollar will not remain the global reserve forever. Fink highlighted how the US debt can potentially lead to nations ditching the US dollar for other currencies. Fink also believes digital currencies, like Bitcoin (BTC), could eventually dethrone the greenback.

The de-dollarization movement has gained substantial footing over the last decade. China, and other sanctioned nations, like Russia and Iran, have made significant inroads on using alternative currencies for trade. China has also introduced the CIPS (Cross-Border Interbank Payment System) as an alternative to the SWIFT system. CIPS aims to bring the Chinese yuan to the spotlight for international settlements.

Also Read: No De-Dollarization, BRICS Motive Is Going Too Far, Says India

While the US dollar has seen a substantial decline in recent times, replacing the well-oiled dollar-based trade network is no easy task. The US dollar is the most liquid currency in the world. No other currency comes close to the dollar’s availability. While China has pushed for a yuan-based settlement system, fellow BRICS member India has stated that it has no intention of ditching the US dollar. While the move away from the dollar is very real, it will take decades to completely replace it.