The global currency system is tuning into a new device: gold challenges the dollar

Morgan Stanley has presented a fresh analysis demonstrating one of the most significant shifts in the global financial architecture. The role of the US dollar as the primary reserve currency is gradually transforming amid serious structural changes. According to experts from Odaily, the world currency system is currently adjusting to a fundamentally new distribution of power, where the traditional dominance of the dollar is losing its monopoly.

Global Dollarization Losing Strength

Research from an investment bank indicates a gradual retreat of the US currency from its long-standing position. A key indicator of this process is the reduction in the dollar’s share in foreign exchange reserves held by central banks of various countries. Additionally, its use in corporate and sovereign issuances in emerging markets shows a clear downward trend. Despite this, the dollar still holds the largest share in global reserves, indicating the absence of a ready full-fledged alternative.

Gold: A New Competitor in a Multipolar World

However, the situation has radically changed with the active shift of central banks toward gold. The share of the yellow metal in reserves has increased from approximately 14% to between 25% and 28%, with no signs of slowing this trend. This rapid growth in gold’s position demonstrates that the system is indeed adjusting to a new device, where traditional fiat currencies share influence with tangible assets.

Central Banks Reconfigure Their Reserves

Risk premiums and hedging mechanisms continue to exert additional pressure on the US dollar while simultaneously supporting steady demand for gold as a safe haven. This dynamic reflects a deeper reassessment by central banks of their reserve formation strategies in the context of a multipolar world, where geopolitical conflicts and sanctions make traditional currency assets more risky.

Geopolitical Factors and Future Trajectory

Political factors that previously contributed to the spread of dollarization are now in a neutral position or even show slight signs of acceleration in the opposite direction. The short-term evolution of these geopolitical factors will be decisive in determining the scale and pace of further de-dollarization of the global economy. Morgan Stanley emphasizes that even without revolutionary changes, the gradual adjustment of the currency system to a new asset distribution device is already underway.