Digital asset management authorities strongly oppose digital currencies
The US dollar continues to hold its position as the dominant global currency, despite growing discussions about its potential rivals. Massimiliano Castelli, head of strategy and advice at UBS Asset Management, asserts that reports of the dollar's demise are greatly exaggerated.
China's renminbi (RMB) is often cited as a key potential challenger, especially if China's GDP surpasses that of the US. However, significant hurdles limit the RMB’s adoption internationally, such as its lack of full convertibility, capital controls, and relatively low investor confidence in China’s institutions. Despite Chinese efforts to internationalize the RMB, progress remains limited as of 2025.
The euro is often considered the primary alternative major currency to the US dollar. Recent bullish economic outlooks for Europe, including increased government spending in Germany and the EU, support the euro’s strength relative to the dollar. The euro represents a significant portion of the US Dollar Index basket (57%), demonstrating its importance as a competitor. Adoption as a global reserve could increase with European economic cohesion and investment.
Central banks maintain gold as an alternative reserve asset to foreign currency reserves. While gold does not serve direct transactional purposes like currencies, it provides a store of value and financial stability in times of currency volatility. The share of gold in official reserves remains meaningful but has not replaced major currencies.
Rapid growth of digital currencies—both publicly issued stablecoins primarily pegged to the dollar and official digital currencies—could reshape the payments landscape and reduce reliance on the dollar. About 99% of stablecoin market capitalization is linked to the USD, indicating the dollar’s entrenched dominance even in crypto markets. Increased stablecoin use may effectively dollarize emerging market economies rather than replace the dollar.
The future may see a more multipolar currency system but with the dollar still central, shaped by geopolitical, economic, and technological developments. Mark Sobel, US chair at OMFIF, suggests that while the administration's actions may erode the dollar’s dominance, it is not going away soon.
[1] OMFIF’s Global Public Investor 2025 survey [2] Jens Søndergaard, currency analyst at Capital Group [3] Geoffrey Yu, senior EMEA markets strategist at BNY [4] Yara Aziz, senior economist at OMFIF [5] Pierpaolo Benigno and Edoardo Reviglio, from the University of Bern and Yale Law School respectively, and Harold James, Claude and Lore Kelly Professor at Princeton University.
- Analyses from experts, such as Mark Sobel of OMFIF, predict a future with a more diverse currency system, yet with the US dollar remaining central.
- Central banks worldwide, including those in Europe, have gold as an alternative to foreign currency reserves for its value as a store of stability during currency volatility.
- Despite growing digital currencies and potential rivals, reports of the US dollar's demise as the dominant global currency are still overstated, according to Massimiliano Castelli at UBS Asset Management.
- The European Union's increasing economic cohesion and investment could lead to an expansion of the euro's use as a global reserve currency.
- Geopolitical, economic, and technological evolutions could reshape the currency landscape, but the dollar's entrenched dominance, even in digital currency markets, is evident.
- The US dollar's chief competitors, including the RMB and the euro, still face challenges like low investor confidence in China’s institutions and significant hurdles limiting international adoption.
- Jens Søndergaard, a currency analyst at Capital Group, and researchers Pierpaolo Benigno, Edoardo Reviglio, and Harold James propose that geopolitical, economic, and technological policy may impact the dollar's dominance.
- The next few years may witness a more complex currency system with the dollar continuing to hold a central position, as suggested by the Global Public Investor 2025 survey and Geoffrey Yu, senior EMEA markets strategist at BNY.
