Dollar Dominance in Global Debt Moves in Cycles, Fed-linked Study Finds
The US dollar’s role in global bond markets has followed cyclical patterns over six decades, with no consistent trend toward greater dominance or de-dollarization. Three major “dollarization waves” have occurred since the 1960s, with the latest wave beginning after the 2008 financial crisis. As of 2024, emerging markets still issue about 80% of their international bonds in dollars, while China’s efforts to advance the renminbi have had only limited impact. The dollar remains dominant largely because of a lack of credible alternatives. In the global stablecoin market, supply has risen sharply to about $310 billion as of late 2024, with 85% of tokens pegged to the US dollar. Major issuers like Tether and Circle have accumulated substantial US Treasury holdings—Tether holds over $127 billion, and Circle backs its reserves with US government debt. US policymakers view stablecoins as reinforcing the dollar’s reserve role, but European officials warn that this could undermine the euro’s position in international finance. European banks plan to introduce a euro-pegged stablecoin by 2026.
