According to a recent survey, central banks worldwide have started losing confidence in the US dollar. The survey conducted by institutional asset manager Invesco involved 57 central banks, who believe that America's geopolitical behavior and rising debt levels threaten the reliability of the dollar. The survey highlights concerns among central banks, particularly regarding America's relations with Russia and its stance on the Russia-Ukraine conflict. #GOLD #DOLLAR #USA

Threats to the Reliability of the Dollar:

The freezing of Russian assets by Western countries has raised questions about the reliability of the US dollar as the dominant reserve currency worldwide, and high levels of American debt have also raised long-term stability concerns. A significant portion of the participating central banks in the survey believes that American debt levels adversely affect the dollar.

The Rise of the Yuan and the Attractiveness of Gold:

While only a few central banks expect the Chinese yuan to become a global reserve currency, central bankers plan to increase their renminbi assets over time due to its "strong performance and non-correlated returns." According to Invesco's report, central bankers believe that gold has become more attractive as the allure of the dollar diminishes. #CentralBank $PAXG

Gold: The New Favorite Safe Haven:

The majority of participating central bankers (58%) consider gold to have become more attractive. Drawing on the example set by America's freezing of Russian reserves, central banks prefer to increase their physical gold holdings. Physical gold assets have experienced the highest growth compared to 2020, while the use of gold ETFs has declined.

A central bank in a Western country states, "Gold has played a critical role in the past few years: we increased our exposure 8-10 years ago and kept it in London, using swaps and yield enhancement, but now we have transferred our gold reserves back to our own country because its role in being a safe haven asset has increased."

In Summary:

Central banks worldwide express a decrease in their confidence in the US dollar. America's geopolitical behavior and high debt levels raise concerns that question the reliability of the dollar. Consequently, central banks are turning to gold as a more attractive asset and increasing their gold reserves. The rise of gold as a safe haven brings about changes in central banks' asset preferences. These developments can have significant effects on global financial markets and the balances of reserve currencies.