The managing director of the International Monetary Fund (IMF) has said the US dollar is gradually losing its status as the world’s main reserve currency.
Speaking on Monday, Kristalina Georgieva noted that there is no viable alternative among global currencies to replace the greenback in the near future.
“There has been gradual shift away from the dollar, it was 70% of reserves, now it is slightly under 60%,” Georgieva stated at the 2023 Milken Institute Global Conference in Beverly Hills, California.
According to the IMF chief, the euro can be viewed as the biggest competitor to the dollar, while the British pound, the Japanese yen and the Chinese yuan “play a very modest role.”
She stressed that the leading factor for trust in the currency of this or that country is the strength of its economy and the depth of its capital markets.
“And if you are thinking of an alternative in a world in which we may migrate to central bank digital currencies massively… and there I don’t see an alternative, I don’t see it coming anytime soon,” Georgieva said.
Georgieva highlighted the major shocks of the past few years – the Covid pandemic, the Russia-Ukraine conflict and the spike in interest rates after years of loose monetary policy – calling them “a series of unthinkable events.”
She explained that the rapid transition from low to high interest rates has exposed vulnerabilities in the financial sector, and that the high exposure of the US banking sector to the crisis has come as a surprise to IMF analysts.