Central banks post widespread losses on reserves in 2022, greenback's dominance seen as slightly waning centralbanks reserves dollar
Global central banks saw losses in managing their reserves in 2022 amidst an aggressive monetary policy tightening cycle, according to a closely watched central bank survey run by a think tank group. Following the losses, there is now a renewed demand for traditional reserve assets.
Thirty-nine percent said they would deploy less than 5% of reserves due to expected additional market volatility, which signals an emphasis on rebuilding rather than deploying reserves. And challenging market conditions led 10% of central bank respondents to report insufficient reserves. All of them were in Asia Pacific and sub-Saharan Africa.
Capital preservation is now the primary investment objective for 69% of the respondents, up from 61% reported last year. Meanwhile, the appetite for riskier assets is declining."The share that expects to add to equity or corporate bond allocations has halved to less than 10% this year. And there is little interest in alternative or digital assets," the survey stated.
"Central banks expect the dollar to continue dominating global reserves in the next decade, though its influence will wane slightly," according to respondents."A net 6% of respondents expect to reduce their dollar holdings over the next ten years. But this shift will be in line with the slow, decades-long trend of de-dollarization."
France Dernières Nouvelles, France Actualités
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