According to Bank of America, gold has overtaken the euro to become the world's second largest reserve asset, accounting for about 16% of central banks' total reserve assets. This shift is due to the wave of gold purchases by central banks and the rapid rise in its price in 2024.
The dollar's share of reserves has fallen to 58%, reflecting a move toward replacing fiat currencies with gold, especially in Eastern emerging markets. In the first six months of this year, central banks added 483 net tons of gold, up 5% from the record first half of 2023.
Since the turn of the century, the share of dollars in global reserves has declined by 14%. While this does not signify an imminent collapse of the dollar, it does indicate a gradual shift away from its dominance. The recent recalibration of monetary policy could put further pressure on the dollar, making it more difficult to finance additional Treasury debt and increasing interest expenses.
Continued de-dollarization could lead to a fall in the value of the dollar and a currency crisis, eroding its purchasing power and raising prices, with the extreme risk of hyperinflation.
Mike Maharrey. "Gold overtakes the euro to become the second most important reserve asset for central banks" Bullion.