According to analysis by Investing.com India, the world isn't moving away from the dollar but is shifting dollars from traditional reserves to state banks, pension funds, and other quasi-sovereign investors. The IMF's data on currency composition of foreign exchange reserves is closely scrutinized, yet the impact of the dollar's share shifting from 56.5% to 57% is minimal. Neither the stock of global reserves nor dollar reserves has changed significantly in the last ten years, with the action occurring elsewhere in the financial system. As Brad Setser, senior fellow at Council on Foreign Relations, explains, this represents de-reservification rather than de-dollarization - a fundamental shift in where dollar reserves are held rather than a decline in dollar usage.
As reported by Investing.com India, China's state banks hold several trillion in foreign assets, with the country reporting $3.3 trillion in gross foreign assets to the Bank of International Settlements. The broad contours are confirmed by state commercial banks' 2025 annual reports, showing the top five banks held a combined $2.5 trillion in foreign currency assets. Similarly, Japan's Government Pension Investment Fund holds $986 billion in foreign assets, nearly matching the government's FX reserves of $1.1 trillion at the end of August. Korea's National Pension Service also holds more foreign assets than the Bank of Korea's FX reserves. As Setser notes, Japan's FX reserves are on the books of the Ministry of Finance and the GPIF is overseen by the Ministry of Health, Welfare and Labor - these are almost all assets of the Government of Japan or the broader public sector, not its central bank.
According to the analysis, the bulk of foreign assets held by state banks are in dollars, with the real story being the rapid growth of state banks' dollar holdings rather than static dollar holdings. China's policy banks (China Development Bank, China Exim) hold nearly $1 trillion in foreign assets, with AidData work pointing to this amount with a hefty dollar share. Japan holds a high dollar share in its FX reserves, which are primarily invested in Treasuries, making the Ministry of Finance the largest contributor to U.S. foreign official holdings of Treasuries. Setser explains that China reports $3.3 trillion in gross foreign assets to the BIS, which maps to the BOP data showing almost $4 trillion in gross outflows through the banking system, with the sum of gross outflows in 'other' plus the $500 billion in foreign currency bonds held by the state commercial banks.
As reported by Investing.com India, 30-year long bond yield reached 5.57% and 10-year note yield hit 5.26% as of September 28 at 10:00 PM. The analysis suggests that the dollar's dominant role in the international monetary system depends on portfolio choices of private and semi-private investors, not just central bank FX reserves. The foreign bid for risk assets, not Treasuries, has helped keep stock market valuations extended, with the dollar's global role increasingly as a source of returns rather than safety. Setser emphasizes that the foreign bid for risk assets has been crucial for maintaining extended stock market valuations, while the dollar's global role increasingly serves as a source of returns rather than safety.
