• Credit Agricole, in a client note, said that Bitcoin’s share of international transactions reached a decade-high in 2023. Meanwhile, foreign holdings in U.S. Government bonds remained stable.
  • The USD’s lead is persistent, meaning investors can continue to store money in this currency even during times of global economic stress.

BTC Price Index and Live Chart – CoinDesk”>(BTC) inception over a decade ago, crypto propounders have been obsessed with “de-dollarization,” a term used to describe shifting away from the U.S. dollar’s (USD) role as the global reserve currency.

Last year, the calls for reform became louder as regional banks in America faced turmoil and federal debt reached a record of $34 trillion. Data shows that the dollar remains the preferred currency for international transactions. The global demand for U.S. Government Bonds has remained stable.

The USD’s share of international SWIFT transaction soared in 2023, reaching its highest level for more than 10 years. Credit Agricole‚Äôs G10 FX Strategy team stated in a Monday note that the EUR share fell, while the JPY, GBP, and JPY moderated.

The growing importance of USD as the currency for international payments and transaction is another reason why global officials and private investors buy the currency. This should, in turn, slow down any movement towards dedollarisation”, the strategists led by Valentin Marinov added.

The dollar will likely remain the currency or asset of choice during stressful times, and it will drain money from other assets such as bitcoins and stocks.

In 2023, data from the International Monetary Fund showed that the USD would still hold 59% of the foreign exchange reserves held by central banks around the world. This is the same as it was in the past three years. The euro’s percentage dropped to its lowest level since 2017.

The note stated that non-Asian countries compensated for China, Hong Kong and Japan’s decline in holdings by 2023. This kept the global tally constant.

We continue to believe that aggressive USD unwinding expectations are premature. Credit Agricole noted that whereas UST holdings in China, Hong Kong, and Japan (and to a lesser extent, Japan) were on a downward trend throughout 2023 the demand for USTs across the world held up fairly well. It is also worth highlighting the fact that the USTs held by Ireland and Belgium, which are viewed as proxy holdings for foreign investors such as China, have performed well.

<a href="https://www.globaltimes.cn/page/202312/1303982.shtml#:~:text=China%27s%20overall%20holdings%20of%20US,of%20%2497.5%20billion%20within%202023." Global Times reports that China's holdings of U.S. Treasury Bonds totaled $769.6 Billion in October. This is a drop of $97.5 Billion in the ten months since last year. The de-dollarization story was fueled by the continued unwinding in China's Treasury holdings.

According to Credit Agricole the decline of Treasury holdings in some countries correlates with their respectable foreign exchange reserves. China has been storing reserves from trade surpluses for years in U.S. Treasury Bonds, to underwrite American consumption.

Marc Chandler: Read more about Bitcoin: It is unlikely that it will replace the U.S. dollar as a global reserve currency.

Parikshit Miishra is the editor.