The US dollar's share of global central bank reserves has declined from 73 percent in 2001 to 58 percent today, a gradual erosion that has accelerated slightly since the application of dollar-based sanctions against Russia. China has been the most aggressive in promoting alternatives, expanding the use of the yuan in bilateral trade agreements with major commodity producers including Saudi Arabia, Brazil, and several African nations.
Most economists believe the dollar's reserve currency status is secure for the foreseeable future given the depth and liquidity of US capital markets and the absence of a credible alternative. However, even a modest further reduction in dollar demand has meaningful implications for US borrowing costs and the government's ability to run large deficits at sustainable interest rates.
