Core Viewpoint - The article discusses the decline of the US dollar's share in global foreign exchange reserves, highlighting a trend towards a multipolar international reserve currency system, with the dollar's share dropping to a 30-year low of 56.32% as of the second quarter of this year [1][11]. Group 1: Dollar Reserve Share Dynamics - As of the end of Q2, the dollar's share of global foreign exchange reserves fell from 57.79% to 56.32%, a decrease of 1.47 percentage points, marking the 11th consecutive quarter below 60% [1]. - The decline in the dollar's share is attributed to a 7.1% depreciation of the dollar index during the same period, indicating a negative valuation effect [1][3]. - The IMF's article on the same day emphasized that the dollar's reserve share remained stable when adjusted for exchange rates, suggesting that the decline was primarily due to valuation losses rather than a fundamental shift in reserve preferences [3]. Group 2: Euro and Other Currencies - The euro's reserve share increased from 20% to 21.13%, a rise of 1.13 percentage points, but this was largely due to a 9% appreciation against the dollar, which masked a potential decline in its reserve share if exchange rates had remained stable [3][4]. - The article argues that the focus on exchange rate effects overlooks the positive impact of asset price revaluation on the dollar's reserve share [4]. Group 3: US Long-term Securities and Foreign Holdings - As of June, foreign official holdings of US long-term securities (excluding international organizations) amounted to $67,395 billion, closely aligning with the IMF's reported global dollar reserves of $67,733 billion [4]. - The TIC report indicates that foreign official investors held $38,191 billion in US Treasury securities, $5,078 billion in agency debt, $2,185 billion in corporate bonds, and $21,941 billion in US equities, with equities representing over 30% of total holdings [4]. Group 4: Market Trends and Investment Behavior - The US stock market experienced significant volatility, with a 4.8% decline in Q1 followed by an 11% rebound in Q2, impacting the valuation of US equities held by foreign officials [6]. - In Q1, foreign official holdings recorded a valuation loss of $197 billion, while Q2 saw a valuation gain of $2,152 billion, indicating the substantial influence of market fluctuations on reserve valuations [6][8]. - In Q2, net purchases of US long-term securities by foreign officials fell to $51 billion, a 94.4% decrease from the previous quarter, highlighting a shift in investment strategy towards equities and away from safer assets like US Treasuries [8]. Group 5: Trends in Global Reserve Currency System - The article notes a continuing trend towards the diversification of the international reserve currency system, often associated with "de-dollarization," which refers to reducing reliance on the dollar in international trade and finance [12][20]. - Despite the decline in the dollar's share, the article suggests that the dollar's dominance remains resilient, as evidenced by its continued high percentage in global foreign exchange transactions [21].