US Dollar to Retain Dominance Amid De-Dollarization Fears, JPMorgan Says

Despite ongoing discussions about de-dollarization, the US dollar (USD) will maintain its hegemonic status, according to two JPMorgan strategists. Research claims that the dollar's strength persists despite emerging challenges.

LONDON (Reuters) - Signs of de-dollarisation are unfolding in the global economy, strategists at the biggest U.S. bank JPMorgan (NYSE: JPM) said on Monday. However, these signs aren't expected to dethrone the USD anytime soon.

We’ve moved from headlines hustling de-Americanization to now de-dollarization. That escalated quickly, but is it a real threat? While USD’s share of FX reserves – the most commonly analyzed barometer of dollar dominance – has decreased, notably in emerging markets, the dollar's overall strength remains significant.

Concerns about alternative currencies and initiatives such as the BIS’s Project mBridge, exploring alternative central bank payment systems, could eventually challenge the dollar’s dominance, but they’re still in relatively early stages of development. JPMorgan believes the dollar's established infrastructure and global usage will ensure its continued prominence.

The JPMorgan analysis suggests that the fears of a rapid and complete de-dollarization are likely overstated. The US dollar remains the world's primary reserve currency and the dominant currency for international trade and finance. While shifts are occurring, a complete overhaul of the global financial system is not imminent.