By Rhod Mackenzie

The independent analytical center "Official Forum of Monetary and Financial Institutions" (OMFIF), of course, could not pass by the de-dollarization that was gaining momentum, i.e. the process of losing the status of the dominant currency by the US dollar, and conducted a survey among Central Banks. His main conclusion is that the Central Banks understand and agree that the share of the US dollar in the world's foreign exchange reserves is steadily declining. At the same time, everyone agrees that the process of losing the dominance of the American currency will take a long time and will obviously last for several decades. On the other hand, it is also obvious that this process is irreversible and that under the best scenario for the US dollar, it will remain the world currency, but will cease to be the only and main one.

De-dollarization is an objective process, but there are countries that are ready to support and accelerate it in every possible way. So, for example, China is energetically trying not only to "topple" the US dollar, but also to strengthen the position of its yuan in the international arena with the obvious goal of making it take the place of the US currency. Of course, Beijing understands that this process is long and will also take decades. The Central Banks also understand this, but they believe that before becoming a world currency, the yuan must also outperform the euro.

According to the results of the OMFIF survey, one in seven (14%) central banks on the planet plan to increase the share of the euro in their foreign exchange reserves in the next two years. The process of de-dollarization is long, but the situation is still changing rapidly. This is noticeable at least by the fact that last year and the year before last, the Central Banks were not going to increase the share of the European currency in reserves.

"It appears that a rising discount rate in Europe is making fixed-rate assets more attractive," OMFIF said in a report.

Every tenth Central Bank (10%) expects an increase in the share of yuan in foreign exchange reserves. In another 6% of the Central Banks participating in the survey, they are going to increase the share of the US dollar.

It should be borne in mind that the picture described above - an increase in interest in the euro has a short-term perspective. The above figures refer to plans for the next two years. In the long term, the picture looks different. 6% of Central Banks (mainly Latin American and European) plan to reduce the share of the US dollar in their foreign exchange reserves in the next 10 years. The authors of the OMFIF report predict that by 2033 the share of the dollar will drop from the current 58% to 54%. That is, the dollar will continue to weaken, but, according to the forecast, it will remain the dominant reserve currency in 10 years.

9% of central banks plan to increase the share of the euro in their reserves by 2033. And almost every third bank (over 30%) plans to increase the share of the yuan, which will allow the share of the Chinese currency in foreign exchange reserves to double in 10 years: from the current 3% to 6%.

“Almost 40% of central banks plan to increase the share of the yuan in the next 10 years, i.е. the Chinese currency will be the most demanded and attractive, says the OMFIF report. Respondents plan to diversify their reserves. The growing role of the Chinese economy in the global economy is the main motive to increase the share of the yuan. An increase in the share of the Chinese currency in global foreign exchange reserves is quite likely, but this process will take place gradually.”

This article originally appeared in Russian at www.expert.ru