Market News

STORY: The custodians of trillions of dollars of global central bank reserves are eyeing a move away from the greenback.

With gold, the euro and China's yuan all in favour.

It comes as the splintering of world trade and geopolitical upheaval has sparked a rethink of financial flows.

A report by the Official Monetary and Financial Institutions Forum is due to be published later on Tuesday (June 24).

It says one in three central banks managing a combined $5 trillion plan to increase exposure to gold over the next two years.

The survey of 75 central banks was carried out between March and May.

And gives a first snapshot of the repercussions of Donald Trump's tariffs.

Gold, which central banks have already been adding at a record pace, is expected to benefit further.

With around 40% of central banks planning to increase gold holdings over the next decade.

The US dollar, the most popular currency in last year's survey, fell to seventh place this year.

70% of those surveyed said the U.S. political environment was discouraging them.

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In currencies, the euro and yuan stand to benefit the most from the diversification.

Around 16% of central banks surveyed by OMFIF said they plan to increase euro holdings over the next two years.

That makes it the most in-demand currency, up from 7% a year ago, followed by the yuan.

Nearly a third of central banks are expecting to increase holdings of the yuan and its share of global reserves is seen tripling to 6%.

The survey respondents expected the euro to reach about a 22% share of global reserves in 10 years' time.

But Europe could attract a higher share of reserves sooner.

Sources speaking to reserve managers say that's if the bloc is able to boost its pile of bonds that are currently dwarfed by the $29 trillion U.S. Treasury market.