A new study by the Bank for International Settlements ( BIS ) has found no “consistent dollarization trend” after looking at the US currency’s share of international debt securities issued over the past six decades.

“The dollar’s dominance has waxed and waned over time rather than rising or falling,” it says.

Instead, the authors – four economists from the bank’s Monetary and Economic Department – observe several “dollarization waves” over the period, “belying narratives about both rising dollar dominance and de-dollarization”.

Published on January 22, the study finds that the value of international debt securities ( bonds listed or registered in or following the legal covenants of financial markets outside where the issuer resides ) rose from US$2 billion in 1970 to US$30 trillion in 2024 – US$6 trillion more than the outstanding cross-border loans of banks in BIS reporting countries.

The dollar’s share in global debt securities fell from close to 60% in the early 2000s to about 43% in 2008, before surging to 60% in the latter half of the 2010s and stabilizing until the end of 2024.  Strikingly, its share in 2024 was close to its share in 2000.

“When we extend our investigation to a longer period dating back to 1966, we find similar dollarization waves,” the study says. The dollar’s share increased similarly in the early 1980s and late 1990s before falling back.

Its share today — the peak of the current dollarization wave — is “not very different” from the share at the two previous peaks in 1984 and 2000.

And after half a century and three dollar waves, today’s share is “very similar” to what it was at the end of the Bretton Woods system in 1973.

‘Euro moment’

As for the euro, its share of debt securities rose “considerably” after its creation in 2000.

“This euro moment lasted until about 2008, with volumes of euro-denominated new issuance in some of those intervening years nearly matching issuance volumes in US dollars.”

The euro’s share – driven by both bank and non-bank issues – fell after the global financial crisis before recovering in the second half of the main sample period from 2000 to 2024. Over the same period, the dollar’s share rose, although it fell briefly after the crisis –a relatively small decline compared to the euro’s fall.

Renminbi rivals yen

The study also finds that measures to promote the renminbi have had “little effect” on the Chinese currency’s use in international debt securities.

But “the renminbi appears to have gained some momentum, rising from its near-zero levels since 2000”, it finds.

By 2024, the Chinese currency’s share, “while still modest, surpassed that of the Swiss franc and rivalled that of the Japanese yen.”

In turn, the Japanese and Swiss currencies saw their shares in international debt securities “decline considerably over the past quarter of a century”.

Meanwhile, the British pound’s share in 2024 was comparable to what it was in 2000.

Key questions

Was the “euro moment” driven by prospects of a new currency of a large economic bloc becoming a major alternative to the dollar, perhaps even rivalling it? Or did the flood of euro issues by banks and non-banks simply reflect excessive financial risk-taking?

Moreover, what caused the sharp slowdown in euro issuance? Was it stricter regulation after the global financial crisis that constrained European banks? Or was it the sovereign debt crisis in the eurozone that deflated the currency’s rise?

More broadly, what factors – countries, sectors, or issuers – drive a dominant currency’s use compared with the use of alternatives?

“Addressing such questions will considerably expand our understanding of the dynamics of dominant currencies and factors governing the evolution of the international monetary system,” the study concludes.