Via Bloomberg reporting (gated) on a JP Morgan note for clients.

  • #1 among the factors that could threaten the dollar’s long-term dominance is political dysfunction in the US that could block efforts to manage the national debt, “preventing a government from stabilizing the economy during a crisis due to fiscal constraints,”
  • #2 is intensifying competition between the US and China
    • “If US-China tensions intensify and we get more global fragmentation, it would likely lead to de-globalization in trade and finance,”
    • “In finance, it could also lead to dedollarization.”

JP Morgan says the impact of a move away from the dollar and shocks to its stability would include bringing down the value of the greenback and equity multiples while boosting bond yields

  • chance of the dollar being supplanted altogether as the key reserve currency within the next 10 years are quite low
  • see a “partial dedollarization” as more likely, with China taking on more and more of the greenback’s role among non-US aligned nations

USD is still the dominant reserve currency

  • USD share of international reserves fell from 73% in 2001 to 58% in 2022 (IMF data)
  • USD allocation in sovereign wealth fund portfolios has offset that decline


Count me as one those skeptical of the yuan supplanting the USD at anything beyond 'partial'.

king dollar