Global central banks to boost share of Chinese yuan while reducing US dollar holdings survey

One third of central banks worldwide will add the yuan to their reserve assets in the nearest future, prompting the rise of the Chinese currency, a global survey shows.

According to the Global Public Investor survey, published by the London-based Official Monetary and Financial Institutions Forum (OMFIF), 30% of central banks plan to increase their yuan holdings over the next 12-24 months, up from only a 10% increase last year.

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OMFIF claims the yuan's rise is likely to be a global trend, but may be especially strong in Africa, where nearly half of central banks are set on boosting their yuan reserves.

The findings also showed that 20% of the world’s central banks want to reduce their US dollar holdings in the coming months, while 18% plan to cut their euro reserves and 14% their holdings of euro-zone sovereign debt.

In one such move, Russia has fully eliminated the US dollar from its National Wealth Fund, reducing its share from 35% to zero. Meanwhile, the country raised the amount of Chinese yuan in the fund to 30.4%, which put it in second place after the euro with 39.7%. 

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According to OMFIF data, central banks, sovereign wealth funds and public pension funds currently control a total of $42.7 trillion in assets. Central bank reserves globally jumped some $1.3 trillion in 2020 to a new peak of $15.3 trillion. The majority of global central banks insist that financial markets depend on their monetary policies. However, only 40% believe these policies need to be actively updated.

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