US policy factors 'critical' to extent of de-dollarisation shift, Morgan Stanley says

Group 1 - The core viewpoint is that U.S. President Trump's policies regarding debt, trade, sanctions, and security will significantly influence the dollar's status in a transitioning multipolar world [1][2] - Morgan Stanley indicates that the dollar's international role has been gradually declining over the past 25 years, with gold emerging as a major challenger, currently valued at record highs [3] - For the first time since 1996, foreign central banks hold approximately $4 trillion in gold, surpassing the $3.9 trillion held in U.S. Treasuries [3] Group 2 - Current concerns affecting the dollar include U.S. debt sustainability, pressure on the Federal Reserve, and the independence of key institutions [4] - Elevated trade uncertainty and Trump's tariff strategies are contributing to the geopolitical tensions that impact the dollar [4] - Morgan Stanley notes that alliances can increase reserves of the leading currency by about 30 percentage points, suggesting that a NATO breakup could negatively affect the dollar [5]