Central banks are looking to the renminbi to diversify their foreign currency holdings, a sign that geopolitical flare-ups could take away the dollar’s dominance.
According to an annual survey by UBS of 30 leading central banks, conducted between April and June 2022.
“We are seeing a gradual erosion of the dollar,” said Massimiliano Castelli, head of strategy for global sovereign markets at UBS. “The picture emerging is one of a multipolar currency system.”
The growing interest in the Chinese currency comes after Western powers froze about $300 billion in Russian foreign exchange reserves in response to the invasion of Moscow in early 2022, which turned Western powers against Russia and complicates relations with countries that do not participate in sanctions, including China.
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