The stability of the U.S. economic system is coming under intense scrutiny by global central banks, according to a recent UBS Asset Management survey. The survey, which gathered responses from nearly 40 central banks, indicates that two-thirds of reserve managers now harbor doubts about the independence of the Federal Reserve, while almost half worry that deterioration in the U.S. rule of law may significantly influence their investment decisions.
The April 2 “Liberation Day” tariffs—imposed by President Donald Trump—sent shockwaves through both U.S. dollar and Treasury markets, triggering further global apprehension. Trump’s administration has come under fire for attempting to politicize the Fed, advocating unorthodox monetary solutions, and straining long-standing alliances.
As a result, 29% of central banks said they are considering reducing their U.S. asset holdings in light of recent developments. Although 80% still view the dollar as the dominant global reserve currency in the foreseeable future, the current share of the dollar in FX reserves has dipped to 58%, reflecting a subtle shift in sentiment.
Meanwhile, gold is regaining prominence in central bank portfolios. UBS reported that 52% of respondents intend to add to their gold holdings over the next year, with 39% planning to repatriate gold stored abroad—primarily in the U.S.—amid growing sanction risks.
The Chinese renminbi is also emerging as a favored alternative, with 25% of central banks planning to increase exposure to it. Only a net 6% foresee increasing their euro holdings.
Secondary currencies such as the Canadian dollar, British pound, and Japanese yen are also seeing increased interest among reserve managers as they diversify away from U.S.-centric portfolios.
Furthermore, 35% of central banks fear the U.S. could ask its allies to repackage long-term debt into unconventional instruments like zero-coupon or ultra-long bonds—potentially upending global debt structures.
Looking ahead, the euro, renminbi, and select crypto assets are expected to benefit the most from reserve allocation shifts in the coming five years. While the dollar remains structurally dominant, UBS’s survey indicates a clear directional movement toward diversification.
