Central banks worldwide show growing interest in the euro as a reserve asset, with a net 14% planning to boost euro holdings in the next two years, marking high demand.
Rising interest rates in Europe make fixed income assets attractive, leading to increased demand for the euro, according to a survey by OMFIF.
While China aggressively promotes the yuan, central banks also plan to increase yuan holdings in the next two years, reflecting a shifting focus.
Over the next decade, a net 6% of central banks plan to reduce their dollar holdings, but the dollar will remain the dominant reserve currency.
Central banks foresee increased euro reserve assets, indicating the currency's potential role in future diversification efforts.
More than 30% of central banks plan to boost exposure to the yuan, with its share of global reserves projected to expand from 3% to 6% by 2033.
Diversification and China's growing global role motivate central banks to invest in the renminbi, but the rise in reserves will be gradual.
Stay informed as central banks prioritize the euro in the short term and look to the yuan for long-term de-dollarization strategies.