Goldman Sachs Warns "US Dollar at Risk of Losing Reserve Currency Status"

Photo by Bloomberg News

[Asia Economy Reporter Kim Hyung-min] A warning has emerged that the US dollar is at risk of losing its status as the global reserve currency.

On the 28th (local time), Bloomberg News reported that US investment bank (IB) Goldman Sachs released an analysis with this content.

Goldman Sachs warned that the astronomical money printing policy is causing concerns over the dollar's decline, which could lead to the loss of the dollar's status in the international foreign exchange market.

It added, "In the current situation where currency values are falling and real interest rates are dropping to historic lows, gold is the last currency that can be relied upon," pointing to the recent surge in gold prices as a background for the decline in the dollar's value.

It also explained, "Expansionary fiscal policy and massive money issuance will lead to concerns about currency value depreciation," and "After economic activities normalize, it is highly likely that governments and central banks will tolerate inflation to reduce debt burdens."

In this regard, Bloomberg News added that concerns about the loss of the dollar's status as the global reserve currency remain a minority view in the current market.

According to the Bank for International Settlements (BIS) and the International Monetary Fund (IMF), 88% of all foreign exchange transactions are conducted through the US dollar, and 62% of foreign currency reserves held by countries are in US dollars.

However, Bloomberg News analyzed that the attention given to Goldman Sachs' warning reflects the current market anxiety amid growing inflation concerns.