The agency also reported that the steady decline in the dollar’s share of US Federal Reserve reserves, rising geopolitical tensions and the growing tightrope policy of the dangerous US debt ceiling have led to speculation. increased on the global dominance of the dollar. is coming to an end, but the agency has ruled it out for lack of an alternative, expecting the emergence of a multipolar world currency system over the next few decades led by the dollar.
The agency said: “Our view may change depending on several factors, including: declining confidence in U.S. financial institutions, the doubling of U.S. economic sanctions against competing countries, the rise of economic protectionism, and the improving the performance and effectiveness of central bank digital currencies over time.”
Moody’s added: “Most countries in the world hold foreign exchange reserves with backed markets, and the US Treasury bond market, valued at $27 trillion, is the world’s largest sovereign bond market and the world’s largest sovereign bond market. ‘most important safe asset’.
She pointed out that the devaluation of the pound sterling, for example, shows how the dominance of currencies can fade over time, expecting greater diversification of global financial reserves, but dollar competitors such as the the euro and the yuan, for example, are struggling because of the size of the US economy and its openness to absorb huge financial surpluses, and the credibility of the treasury bond market. The US dollar and the security of the dollar’s liquidity and its high confidence in it relative to other currencies, waiting for the euro to regain some gains, but the absence of a common financial policy and the continuing risks of instability financial will limit its appreciation. In China, capital controls and the government’s development model will limit the appreciation of the yuan.
The agency believes that U.S. domestic, foreign and technological financial trends could erode the dollar’s strength over time, pointing out that the greatest threat to the dollar’s position in the near term is represented by policy mistakes that undermine trust, such as default on debt repayment. Payments.
Barriers to trade and foreign investment to protect economic sectors hit by the strong dollar, such as manufacturing, will also undermine access to green currency, the agency said.
A rapid technological transition to digital currencies could provide central banks with a cost-effective and secure way to make international payments.
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