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"Central banks are diversifying at a much faster pace than in previous decades"
A fresh analysis from Société Générale reveals accelerating signs of “de-dollarisation” in global financial markets, as central banks and institutional investors diversify away from U.S. assets in response to geopolitical risks, policy unpredictability, and structural shifts in the global economy.
Société Générale’s latest fund flow analysis also identifies structural shifts in capital allocation. U.S. equity and bond markets are seeing relatively weaker foreign inflows compared to previous cycles, particularly from reserve managers and sovereign wealth funds.
Meanwhile, allocations to non-U.S. markets, especially in Asia, have steadily increased.
Above image courtesy of Société Générale.
The report highlights mounting evidence that the era of dollar dominance is beginning to fracture.
Among the most telling trends is a multi-year rise in official gold purchases by emerging market central banks, a move Société Générale views as a “clear hedge against dollar dependency.”
Researchers at the French bank note that gold demand has remained historically elevated, even as prices hit record highs, signalling a strategic rather than cyclical motive.
"Central banks are diversifying at a much faster pace than in previous decades," says the report, underscoring a reduced appetite for U.S. Treasuries and a growing willingness to hold reserves in alternative forms, including gold and other currencies such as the euro and renminbi.
This aligns with recent findings from Bank of America’s Global Fund Manager Survey, which showed global investors holding their most underweight position on the dollar in two decades.
Jefferies Bank and Commerzbank have also pointed to rising scepticism over the dollar’s long-term reserve status, citing fiscal imbalances, tariff policies, and waning confidence in the Federal Reserve’s independence.
Société Générale stops short of predicting the collapse of dollar hegemony but argues that "the de-dollarisation trend is real and underway."
While the greenback still accounts for the majority of global reserves and international trade invoicing, its relative share is slowly declining, particularly in central bank portfolios.
The report notes that this shift could be gradual but self-reinforcing: "Once trust in the dollar erodes, even marginal reallocations from central banks or sovereign funds can have outsized effects on currency flows and asset valuations."