• Central banks around the world are growing increasingly concerned about the US dollar due to its rising debt levels and uncertain geopolitical environment.
• The survey found that central bankers are looking to increase their holdings of Chinese yuan and gold, both of which have become more attractive as an alternative asset class.
• Physical gold holdings have increased the most compared to 2020, while gold ETF usage has fallen.

Central Banks Concerned About US Debt Levels

Central banks around the world no longer look at the US dollar with the same certainty they did just years ago, according to a new survey from institutional asset manager Invesco. After surveying 57 central banks, it was found that they’re concerned America’s behavior on the geopolitical stage, plus its surging debt levels, are threatening the reliability of the dollar. This is especially true in light of sanctions imposed upon Russia by Western nations in reaction to ongoing conflicts in Ukraine.

Increase Chinese Yuan Holdings

The survey also found that central bankers believe that increasing their holdings of Chinese yuan is a wise move for diversifying their portfolios away from US dollars. They cite strong performance and uncorrelated returns as key reasons for doing so. Furthermore, very few actually see a world where the Chinese yuan becomes the world reserve currency; however, there is still expected to be movement towards this direction over time.

Gold More Attractive

In addition to increasing their renminbi holdings, central bankers believe that gold is another asset that has become more attractive now that the dollar has lost some of its charm. A substantial percentage (58%) agreed that recent events such as freezing Russian assets by Western nations had made gold more attractive than ever before. Consequently, physical gold holdings have increased significantly when compared with 2020 figures while gold ETF usage has decreased accordingly.

Safe Haven Asset

One central bank based in the West commented on how important a role gold had played over recent years: “We increased our exposure 8-10 years ago and had it held in London, using it for swaps and to enhance yields but we’ve now transferred our gold reserves back to our own country to keep it safe – its role now is to be a safe-haven asset.”


It appears clear from these findings that global central banks are realizing they need more diverse portfolios away from relying too heavily on US dollars due to rising debt levels and uncertainty in geopolitics – leading them towards considering alternatives such as Chinese yuan and physical gold reserves instead.

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