The author, chief economist at CICC, argues that a shift away from the dollar’s global dominance was never a straight line. While the dollar’s share of official foreign exchange reserves fell from 72% at the turn of the century to 57% today, it rose slightly from 56% at year‑end, driven partly by exchange‑rate valuation effects. Historical precedent, such as the sterling reserve trajectory, shows reserve transitions are uneven, with temporary rebounds not reversing the broader trend.

US Treasuries have long underpinned the dollar’s role, but as US debt grows and sanctions expand, long‑term Treasuries are losing appeal; the convenience premium has fallen and sometimes turned negative, while short‑term Treasuries and the dollar itself retain liquidity demand. Reserve managers are shifting from “safe‑asset” to liquidity demand, favoring US equities and corporate bonds. Between May 2025 and April 2026, foreign official institutions bought $121 bn of US equities and $49 bn of corporate bonds while selling $18 bn of long‑term Treasuries.

AI‑related transactions increasingly invoiced in dollars could further reinforce the dollar, though equity volatility limits its use as a safe‑asset substitute.