📝 Decline In USD Share of Reserves Affects U.S. Deficit: Natixis

We have seen:a trend decline in the dollar’s share of foreign exchange reserves; a rise in the weight of the dollar at the expense of the euro in international bond issues since 2004. Also, a stability of the dollar’s share of foreign exchange transactions; the stability of the dollar’s share in the payment of international trade transactions.

While there is a decline in the dollar's share of foreign exchange reserves, the stability or the increase in the dollar's share of payments, international bonds issues and the foreign exchange market make favorable developments to the dollar, the financial system and the U.S. legal system.

However, a decline in the dollar’s share of foreign exchange reserves reduces purchases of US Treasuries and makes it more difficult to finance the US external deficit.

- Natixis