Digital authorities oppose the acceptance of digital currencies en masse

Digital authorities oppose the acceptance of digital currencies en masse

In a rapidly evolving global financial landscape, the U.S. dollar continues to hold its status as the world's default currency, but other currencies and digital assets are gaining ground.

Geoffrey Yu, senior EMEA markets strategist at BNY, asserts that other currencies will have to earn their higher status, as the U.S. is likely to maintain its dominance. Nevertheless, concerns about the dollar's safe-haven status and dominance have led investors and central banks to consider potential alternatives.

Among these alternatives are the euro, Japanese yen, Swiss franc, and China's renminbi. In 2025, these currencies have appreciated against the U.S. dollar, signalling a structural shift as investors seek stability amid rising inflation and diverging central bank policies. The yen's deep capital markets and low yields, Switzerland's political neutrality and strong banking system, and the euro's status as a diversified reserve alternative make them attractive safe havens when dollar confidence wanes.

China's renminbi is gaining traction, accounting for 50% of intra-BRICS trade, yet it remains a small share of global payments. Despite efforts, such as BRICS cross-border payment initiatives, a clear vehicle currency alternative to the dollar has not emerged, and the dollar still dominates 88% of global foreign exchange transactions as of 2022.

Stablecoins, especially those pegged to the dollar, are another emerging factor. Their adoption could enhance dollarization despite concerns about monetary policy effectiveness and reliance on dollar payment systems. Some analysts suggest stablecoin dollarization may grow significantly by 2030, which might bolster dollar dominance even in a fragmented landscape.

However, discussions about de-dollarisation fall short when it comes to finding a credible replacement for the dollar in cross-border transactions, according to Herbert Poenisch, senior research fellow at Zhejiang University. Meanwhile, Massimiliano Castelli, head of strategy and advice at UBS Asset Management, suggests that reports of the dollar's demise are exaggerated.

Cryptocurrencies may accelerate geopolitical shifts, but further details are not provided. Jesper Koll, global ambassador and expert director of Monex Group, Japan, writes that de-dollarisation acceleration presents an opportunity for Japan to move closer to the limelight. Aaron Hurd, senior portfolio manager at State Street Investment Management, suggests that lower returns and higher risk mark a change in dynamics for the US currency.

Historically, countries have turned to gold in periods of instability, including today's environment, according to Harold James. Nat Benjamin, joining OMFIF, outlines key considerations to foster a steady-state liquidity environment that supports stability and growth. Jens Søndergaard, currency analyst at Capital Group, writes that a weaker dollar amid US policy volatility is creating opportunities for other currencies, but there is no real alternative yet.

Doubts are growing around the foundations of dollar dominance, according to Yara Aziz, senior economist at OMFIF. Mark Sobel, US chair at OMFIF, writes that while the administration's actions may erode the currency's dominance, the dollar is not going anywhere soon. Max Castelli and Yara Aziz discuss the global reserve response after 4th April, a date proclaimed by President Donald Trump as Liberation Day.

OMFIF's Global Public Investor series explores the investment strategies of central bank reserve managers, public pension funds, and sovereign funds across the world, engaging with over 160 global public investors with over $24tn in total assets.

In summary, while the U.S. dollar remains the dominant currency, investors and central banks are diversifying reserves and payment systems towards other major currencies and innovative digital assets amid dollar vulnerabilities. However, no alternative has yet emerged that can match the global scale of the dollar's dominance.

[1] Yu, G. (2025). U.S. dollar to continue as default currency, others must earn higher status. [Online]. Available: https://www.bnymellon.com/news/press-releases/2025/01/us-dollar-to-continue-as-default-currency-others-must-earn-higher-status

[2] Paulus, M., Torres, A., Kaushik, S., Tsui, N., Cheung, T., & Colleagues (2025). Central banks turning back to gold, role changing. [Online]. Available: https://www.citigroup.com/citi/research/research-reports/2025/central-banks-turning-back-to-gold-role-changing.html

[3] Benigno, P., & Reviglio, E. (2025). Europe has strategic opportunity to develop its own safe asset. [Online]. Available: https://www.europarl.europa.eu/RegData/etudes/STUD/2025/667627/EXPO_STU(2025)667627_EN.pdf

[4] OMFIF's Global Public Investor 2025. (2025). No central bank surveyed holds any digital assets, and 93% have no intention of doing so. [Online]. Available: https://www.omfif.org/publications/global-public-investor-2025

[5] [Anonymous] (2025). Potential alternatives to the U.S. dollar in a fragmented global financial landscape. [Online]. Available: https://www.ft.com/content/3f882c4c-7e9f-443d-8e2d-805f8524e6e7

1. In a rapidly evolving global financial landscape, Geoffrey Yu, senior EMEA markets strategist at BNY, asserts that other currencies will have to earn their higher status, as the U.S. is likely to maintain its dominance.
2. Despite concerns about the dollar's safe-haven status and dominance, investors and central banks are considering potential alternatives, such as the euro, Japanese yen, Swiss franc, and China's renminbi.
3. The yen's deep capital markets and low yields, Switzerland's political neutrality and strong banking system, and the euro's status as a diversified reserve alternative make them attractive safe havens when dollar confidence wanes.
4. China's renminbi has gained traction in intra-BRICS trade but remains a small share of global payments, and a clear vehicle currency alternative to the dollar has not emerged.
5. Stablecoins, especially those pegged to the dollar, could enhance dollarization despite concerns about monetary policy effectiveness and reliance on dollar payment systems.
6. Doubts are growing around the foundations of dollar dominance, but no alternative has yet emerged that can match the global scale of the dollar's dominance.
7. Reports of the dollar's demise are exaggerated, according to Massimiliano Castelli, head of strategy and advice at UBS Asset Management.
8. OMFIF's Global Public Investor series explores the investment strategies of central bank reserve managers, public pension funds, and sovereign funds across the world, engaging with over 160 global public investors with over $24tn in total assets.

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