US dollar continues to dominate global foreign exchange transactions

The US dollar is crucial for Americans and global markets alike, and its international standing affects investments, borrowing costs and everyday prices, noted a latest blog post from the St. Louis Federal Reserve. The US dollar (USD) is the most widely used, employed in 89% of foreign exchange transactions in 2025, according to data in the Bank for International Settlements (BIS) Triennial Central Bank Survey.

The USD has been the dominant reserve currency since 1945, with dollar-denominated securities, mostly US Treasuries and investment-grade corporate bonds, making up approximately 57% of global foreign exchange reserves, for a value of $7.4 trillion, according to another IMF dataset, Currency Composition of Official Foreign Exchange Reserves (COFER), as of the third quarter of 2025. Euro-denominated securities are in second place, making up approximately 20% of global foreign exchange reserves.

Governments and central banks hold large quantities of US dollar assets because the US government and corporations issue a large amount of dollar-denominated, liquid assets that are seen as safe. To earn such a reputation for its assets, the US has had solid legal and economic institutions and an open and generally well-regulated financial system. All these factors reduce the perceived risk of investing in such assets.

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