According to IMF data, since 2014, the U.S. dollar’s share of global reserve currencies has dropped by 7 full percentage points, from 66% to 59%. Starting from around 1996, the share of U.S. dollars as a global reserve currency was always above 60%. From 1978 to 1995, the ratio at times was mostly under 60%. In 1978, there was a massive plunge in the reserve currency ratio that could be linked to U.S. inflation which was at high levels, peaking at almost 15% in 1980. Keep in mind that what’s not included in global foreign exchange reserves are the Federal Reserve’s own holdings of U.S. dollar-denominated assets. The U.S. dollar’s hegemony is a key enabler for the U.S. government to increase its public debt.
The QE programs of Europe and the U.S. have indirectly helped the global reserve currency ratio balance in their favor, at least for the time being. What catalysts could change this?