NY Fed: Global Reserve De-Dollarization Exaggerated by Actions of a Few Countries
nashnova research
A New York Fed study finds the dollar's reserve share drop from 64% to 56% was driven mainly by concentrated selling from a handful of economies like China and Russia — most countries never systematically moved away from the dollar, and the de-dollarization narrative may far outpace reality.
The dollar's reserve share is falling — by how much?
The dollar's share of global foreign-exchange reserves stood at 56% last year, down from 64% a decade ago — an 8-percentage-point decline.
Markets routinely cite this figure as proof that de-dollarization is underway.
This means → looked at as a single aggregate line, it does appear that central banks worldwide are moving away from the dollar. The New York Fed's point: that aggregate line is misleading.
Where does the "collective exit" impression come from?
Fed researchers Linda S. Goldberg and Sneha Parthasarathy found that since 2015, roughly equal numbers of countries increased and decreased their dollar reserves.
In plain terms = it is not a global sell-off. A few heavyweight sellers pulled the total down.
2015–2019: China and Russia were the main reducers. 2019–2023: China, Russia, Mexico, and Morocco drove most of the decline.
What are other countries actually doing?
The study notes that most countries' reserve shifts reflect their own specific needs: accessing dollar liquidity, managing exchange rates, and insuring against funding shocks.
This means → these countries adjust reserves not because they distrust the dollar, but because they are solving immediate, local problems.
The researchers stress that these drivers "retain their potency" — a rotating cast of countries addresses its own reserve-management needs, rather than systematically avoiding the dollar.
Doesn't the IMF data tell the same story?
IMF data from January showed foreign central banks' dollar holdings fell to their lowest share since 1995.
But the decline was driven mainly by a weaker dollar exchange rate, not by active selling of dollar assets.
In plain terms = central banks did not dump the dollar — the dollar depreciated, and the market-value share shrank mechanically.
What does this mean for markets?
The New York Fed's conclusion is blunt: aggregate statistics are misleading, presenting a few large players' concentrated actions as a universal trend.
This reflects a market narrative around de-dollarization that may have run far ahead of the actual data.
This means → in the near term, the dollar's status as the dominant reserve currency faces no broad-based challenge from most countries' behavior. The active reducers remain a small group driven by geopolitics.
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