For the first time since 2023, more central banks globally plan to decrease their US dollar holdings than those intending to increase them over the next 10 years. This finding comes from a newly released report by the Official Monetary and Financial Institutions Forum (OMFIF), a London-based independent research organization.

OMFIF conducted its 2026 survey between March and May, gathering insights from 74 central banks. The report stated, "This year, global geopolitical factors have surpassed the internal political environment of the US as the primary reason for the declining appeal of the US dollar."

Conversely, rising geopolitical risks and growing doubts about the stability of the international monetary system are driving demand for gold. The proportion of central banks planning to increase their investment in the precious metal is at a record high, despite prices having risen by over 20% compared to the previous year.

One-kilogram gold bars at the Argor-Heraeus gold refinery and mint in Mendrisio, Switzerland, on 13/7/2022. *Reuters*.

Gold has become a central focus in the national reserve management strategies of many central banks (82%), according to the report. Among those surveyed, 51% view gold as a hedge against risk, an 11 percentage point increase from 2024.

In the short term, gold is the asset class central banks plan to increase holdings in the most. 30% of respondents intend to raise their allocation within the next one to two years.

Previously, in mid-June, the annual survey from the World Gold Council (WGC), which included over 70 central banks, indicated that 90% anticipate an increase in their total gold reserves next year.

The WGC reported that central banks have purchased an average of 1,000 tons of gold annually over the past 4 years, double the average of the preceding decade. Meanwhile, their US dollar holdings in foreign exchange reserves reached a two-decade low last year, according to JPMorgan.

However, the OMFIF report emphasized that the US dollar retains its dominant role in reserve portfolios and is likely to maintain this position in the near future. According to Andrea Correa, OMFIF's Head of Research, the proportion of US dollars in central bank reserves has remained around 58% over the past 5 years.

Nevertheless, a gradual de-dollarization process is underway, with central banks shifting a portion of their reserves into euros and yuan. Long-term euro holdings are planned to increase by 29% of respondents, compared to 22% a year ago.

According to Karsten Stroborn, Managing Director for Markets at Bundesbank (Germany's Central Bank), the volume of international bonds issued in euros reached a record high in 2025. The euro also became the most used currency in the green bond market.

Additionally, almost all central banks surveyed by OMFIF believe the yuan effectively diversifies portfolios. Demand for the Singapore dollar, South Korean won, and South African rand is also increasing.

Phien An (according to Reuters, CNN)