Some countries are working on reducing their reliance on the dollar, First Deputy Managing Director of the International Monetary Fund (IMF) Gita Gopinath at the Stanford Institute for Economic Policy Research.
"Some countries are reevaluating their heavy reliance on the dollar in their international transactions and reserve holdings. After years of shocks - Including the COVID-19 pandemic and Russia’s invasion of Ukraine - countries are reevaluating their trading partners based on economic and national security concerns," Gopinath said.
Meanwhile, "despite increased geopolitical risks, the latest data show that the U.S. dollar remains dominant," she noted.
"According to SWIFT, it [dollar] accounts for over 80% of trade finance <…>. It also accounts for nearly 60% of FX reserves despite the gradual diversification of FX reserves away from the dollar and partly into non-traditional reserve currencies such as the Australian dollar, and the Canadian dollar," Gopinath said.
Among U.S.-leaning countries "the currency composition of trade finance" has not changed notably during 2022-23, she said, adding though that there have been more visible changes for China-leaning countries.
