Global central banks are accelerating a quiet but consequential shift in how they manage their reserves. For the first time since 2023, more of the world's central banks plan to cut their US dollar holdings than to increase them over the next decade, according to a new survey by the Official Monetary and Financial Institutions Forum (OMFIF), a London-based independent research body that polled 74 central banks between March and May 2026.
Geopolitics Drives the Dollar Down
The OMFIF survey identifies a notable shift in the reasoning behind dollar skepticism. In prior years, domestic US political dysfunction was the primary concern for reserve managers. This year, broader global geopolitical instability has overtaken it as the leading factor reducing the dollar's appeal. The policy turbulence associated with President Donald Trump's trade posture — including sweeping tariff threats that unsettled allies and adversaries alike — forms part of that backdrop, even if the survey does not name it directly.
Despite the sentiment shift, the dollar has not lost its throne. Its share of central bank reserves has held steady at roughly 58% for five years, according to OMFIF research head Andrea Correa. The trend is one of gradual erosion, not collapse.
Gold Demand at Record Levels
Gold is the primary beneficiary of this repositioning. A record proportion of survey respondents — 82% — now treat gold as a core element of national reserve strategy, up sharply from previous years. Some 51% view the metal as a hedge against geopolitical risk, an 11 percentage-point jump from 2024. In the near term, 30% of surveyed central banks plan to increase their gold allocations within one to two years.
This appetite persists even as gold prices have climbed more than 20% year-on-year, a fact that would normally cool institutional buying. The World Gold Council's (WGC) separate annual survey, which covered more than 70 central banks, found that 90% expect their total gold reserves to grow in the coming year. Central banks have collectively purchased an average of 1,000 tonnes of gold annually over the past four years — double the pace of the preceding decade.
Dollar Share at a Two-Decade Low
The cumulative effect of sustained gold buying and gradual diversification is visible in reserve data. The dollar's share of global foreign exchange reserves fell to its lowest level in twenty years in 2024, according to JPMorgan. That figure reflects years of incremental reallocation rather than any single dramatic event, and it suggests the current survey results are a continuation of a well-established structural trend.
The Euro and Yuan Gain Ground
The dollar is losing share not to one rival but to several. Some 29% of respondents plan to increase euro holdings over the long term, up from 22% a year earlier. Karsten Stroborn of the Bundesbank noted that international euro-denominated bond issuance hit a record in 2025, and the euro has become the dominant currency in the green bond market — a segment growing in importance for sovereign investors with ESG mandates.
The Chinese yuan is also attracting attention. Nearly all central banks surveyed by OMFIF acknowledged the renminbi's value as a diversification tool, even if outright allocations remain modest. Beyond the major currencies, demand is also building for the Singapore dollar, the South Korean won, and the South African rand — a sign that reserve managers are spreading risk more broadly across the currency spectrum.
What This Means for Asian Reserve Managers
For investors and policymakers watching Vietnam and the broader Mekong region, the survey carries practical implications. Central banks in emerging Asia hold large dollar reserves partly to manage exchange-rate stability and partly because dollar-denominated trade flows demand liquidity in the greenback. Vietnam's State Bank, like many of its regional peers, has historically maintained high dollar allocations for both purposes.
Yet if reserve managers globally are raising gold targets and diversifying into euros and regional currencies, the implied message for emerging-market central banks is that the cost of dollar concentration — in terms of geopolitical exposure and currency risk — is rising. Countries with significant trade ties to the European Union and Goldman Sachs-tracked emerging markets may find the euro's expanding role in bond markets relevant to their own reserve composition debates.
Investor Takeaway
The OMFIF survey captures a world in which the dollar remains dominant but increasingly questioned. Central banks are not abandoning the dollar; they are buying insurance against the possibility that its dominance frays further. Gold at record allocations, a rising euro, and growing interest in regional currencies all point toward a slower, multi-decade rebalancing. For investors in Vietnam and Mekong-region assets, the key signal is that reserve diversification is now driven more by geopolitical calculation than by pure return-chasing — and that calculus is unlikely to reverse quickly.
