Central banks are preparing for a world where the dollar still dominates, but no longer gets the same automatic trust.
A survey released by the Official Monetary and Financial Institutions Forum found that more central banks plan to reduce dollar allocations than increase them over the next decade. OMFIF said it was the first time its survey had recorded that balance moving against the U.S. currency.
The survey covered 90 central banks, public pension funds and sovereign funds overseeing about $10 trillion in assets. The findings come as public investors weigh U.S. policy risk, geopolitical shocks and a higher-rate environment that has kept the dollar attractive in the near term.
Markets are watching that split closely. Market data showed the Dollar Index at 101.14, up 0.26%, while gold futures traded at $4,048.25, up 0.23%. The dollar has gained 3% this year, helped by higher U.S. interest rates, demand for U.S. assets and safe-haven flows linked to the U.S.-Iran war.
But reserve managers are looking beyond the next trade. The survey found that 79% of central banks and 60% of public funds believe the global monetary system is moving toward a more multipolar structure.
Gold is taking a larger role in that planning. OMFIF said gold, held by 82% of central banks surveyed, “has moved to the centre of reserve management strategy.” A net 30% of respondents plan to raise gold allocations over the next one to two years.
Artificial intelligence is also moving into public finance. More than two-thirds of central banks plan to increase AI integration, mostly in data analysis and back-office work.
“The old assumption that public investors can wait for the environment to normalise looks increasingly unrealistic,” OMFIF senior economist Yara Aziz wrote in the report.
