The U.S. dollar has long been the backbone of global finance, the currency that anchors reserves, trade, and trust. Yet, cracks in the world’s confidence in the greenback are beginning to appear. The latest IMF data puts the dollar’s share of global foreign exchange reserves at just over 56% in mid-2025, its lowest level in decades and down from more than 70% at the turn of the century.
On paper, the change seems small. In practice, it reflects a quiet but deliberate diversification. Central banks are spreading their risk, adding euros, yen, and recently even gold, to their reserves as China’s financial reach is growing, while U.S. sanctions demonstrate the successful weaponisation of the dollar. At the end of June 2025, the U.S dollar’s share of global foreign exchange reserves dropped to at least a 30-year low, sparking a debate among economists and policymakers over the reasons behind the dollar’s seemingly eroding dominance – not just in foreign reserves but in international trade, as well. To outline the points in time when reserves truly dropped their dollar holdings, the team at BestBrokers looked at the most recent International Monetary Fund (IMF)’s Currency Composition of Official Foreign Exchange Reserves (COFER).
We found that 2025 emerges as the year when the U.S. dollar finally began to lose its grip; it is far from collapsing, however. Its influence is still very much strong, even in times of political and economic uncertainty, with the greenback now taking up а record-low 56.3% of allocated foreign exchange reserves around the world.
US Dollar Dominance in Foreign Exchange Reserves Around the World, 1999-2025
Source: International Monetary Fund, COFER
The timeline above shows that ever since the turn of the new century, global foreign exchange reserves have gone up, and with them, the reserve holdings in dollars, except for several notable drops. At the end of 2008, during the global financial crisis, dollar reserves shrank by more than 4% in the aftermath of the bankruptcy of Lehman Brothers and the stock market crash. There was another drop of 0.26% in the first quarter of 2012, a delayed effect of the European debt crisis, which accelerated the long-term decline in the euro’s shares of foreign exchange reserves a few months prior.
What followed was an overall upward trajectory for the dollar until the COVID-19 pandemic, which, from a somewhat serious health concern, quickly grew to a global-scale economic crisis. Between June and December of 2019, allocated foreign exchange reserves in dollars dropped by more than 0.4% to around $6.73 trillion. In 2022, however, global dollar reserves dropped much more significantly, and this time, the precursor was the Russian invasion of Ukraine on 24th February, the first full-scale war in Europe since World War II. Between March and October, central banks’ holdings of U.S. dollars fell by around 9.6%; in nominal terms, this was a decline of more than $440 billion and marked the dollar’s lowest level since 2017.
Ever since then, the value of dollar reserves has been higher, with a couple of declines, namely one following the U.S. dollar peak of mid-2023, when banks started rebalancing their portfolios with euros and gold, while many economies in Asia and the Middle East started diversifying away from the dollar for political and strategic reasons amid the rising tensions between the United States and China. Then, the second quarter of 2024 also coincided with renewed de-dollarisation rhetoric among the BRICS countries, while the volatility in U.S. Treasury yields urged some emerging markets to increase their gold holdings over their dollar reserves. Of course, the dollar’s mild depreciation in Q2 2024 further reduced the nominal valuation of reserves held in USD.
While all these drops in the nominal value of dollar reserves were not very significant, over time, their true effect started to show. The euro and nontraditional currencies (Yuan, Canadian and Australian dollars, Korean won, Singapore dollar) gained some ground, while the share of U.S. dollar reserves fell to just 56% by mid-2025.
Share of US Dollar & Euro in Foreign Exchange Reserves, 2016-2025
Source: International Monetary Fund, COFER
The most recent figures from the International Monetary Fund (IMF)’s Currency Composition of Official Foreign Exchange Reserves (COFER) show that global reserves reached approximately US$12.94 trillion in Q2 2025, up from US$12.54 trillion in Q1 2025. Within that total, the dollar’s share of “allocated” reserves declined to 56.32% in Q2 from 57.79% in Q1. Although much of the “loss” in share is due to exchange‐rate effects, i.e., non‐dollar currencies appreciating in dollar terms rather than massive dollar selling, this still signals a meaningful rebalancing.
Historically, the U.S. dollar’s share was much higher: for example, it held over 70% of global official FX reserves in the early 2000s. The downward drift reflects several intertwined causes. First, we see geopolitical and strategic shifts: central banks increasingly treat heavy dollar holdings as a concentration risk, especially in the context of sanctions, trade tensions, and U.S. policy unpredictability. For instance, despite the dollar’s continued predominance, surveys by the Official Monetary and Financial Institutions Forum (OMFIF) found that 18% of reserve managers planned to increase holdings of the dollar over the next 12-24 months, a notable shift after decades of steady diversification away from the greenback.
Second, the rise of alternatives plays a pivotal role. The euro’s share rose to 21.13% in Q2 2025 from around 20% in Q1, and the category of “other currencies” (excluding USD, Euro, and Renminbi) rose to 20.43% in Q2 from 20.09% in Q1. The Chinese renminbi remained steady at around 2.12% in Q2, but its gradual inclusion, as well as rising holdings in other currencies, points to a broadening of reserve‐currency composition. Third, the surge of gold purchases by central banks in emerging markets (notably China, India, and Russia) adds another interesting dimension: while outside COFER’s currency figures, it signals a strategic push to diversify reserve assets away from dollar‐dominated debt and currency holdings.
Currency Composition of Official Foreign Exchange Reserves 2000-2025
2000-Q4
2005-Q4
2010-Q4
2015-Q4
2020-Q4
2025-Q2
Source: International Monetary Fund, COFER
The dominance of the U.S. dollar in global foreign exchange reserves remains clear, but the long-term trend tells a quieter story of diversification. From under $1 trillion in 1999 to more than $6.7 trillion at the end of June 2025, the dollar reserve’s absolute value has soared, yet its share has slipped. In the past quarter of a century, the American currency has gone from accounting for 71%-73% of central banks’ holdings to just 56.3%. This is a drop of nearly 15 percentage points, a slow but definitive recalibration in the international monetary system.
Meanwhile, the Euro emerged as the dollar’s most credible rival in the early 2000s, with its share of foreign exchange reserves climbing from around 18% to more than 21%. The nominal value of Euro-denominated reserves, however, skyrocketed from $246 billion to over $2.5 trillion, stabilising slowly after Europe’s debt crises and uneven growth.
The pound sterling also saw a striking rise over the past 25 years – from 2.74% the share of global foreign exchange reserves in the British currency rose to 4.83% or more than $580 billion in mid-2025.
More telling, however, may be the growth of the other currencies in the IMF data: their share of global reserves went up from around 10% at the end of 2000 to 22.55% in 2025. The figures hint at growing interest in smaller but increasingly trusted alternatives such as the Canadian and the Australian dollars, and even the Chinese yuan (renminbi), which has found its place since its addition to the IMF’s Special Drawing Rights (SDR) basket in 2016. The yuan, however, is not likely to widen its influence any time soon, in global foreign exchange reserves at least, due to China’s capital controls and the lack of financial transparency.
Final Thoughts
While the U.S. dollar still accounts for the bulk of global reserves, these figures unveil the unmistakable, subtle shift from absolute faith in the Almighty dollar to a sober realisation that overreliance on a single currency poses great risks in an increasingly multipolar world.
If current trends are sustained, the next decade could see reserve portfolios far more diversified than at any point in modern history.