Federal Reserve Bank of New York study finds dollar reserve decline driven by handful of countries, not global trend

The de-dollarization narrative has become one of the most popular themes in global macro circles over the past few years. But new research from the Federal Reserve Bank of New York suggests the scoreboard might be misleading. The study found that the decline in the dollar’s share of foreign exchange reserves, which fell from 64% in 2015 to 56% in 2025 according to IMF COFER data, doesn’t reflect a broad-based retreat from the currency. Instead, it’s mostly the result of moves by a small number of large reserve managers. A few countries doing the heavy lifting The New York Fed’s researchers identified China, Russia, Mexico, and Morocco as the primary drivers behind the aggregate decline. The bulk of the drop occurred after 2019, with the period from 2019 to 2023 accounting for roughly 2.3 percentage points of the decrease. The research breaks down reserve shifts into two distinct channels. The first is what the authors call the “active preferences channel,” which captures intentional decisions by central banks to change the currency composition of their reserves. The second is the “reserve change channel,” which reflects mechanical adjustments. When a country’s total reserve pool gr...