While many analysts are increasingly worried about the dollar losing its status as the world’s reserve currency, Goldman Sachs analysts said they do not believe in de-dollarization, believing that the dollar will continue to dominate the world stage for a long time.

While GS acknowledges that there is an obvious risk if the U.S. abuses its exorbitant privileges, the bank believes that de-dollarization is essentially a lot of talk but little action.

“We see no evidence so far in the data (e.g., even Brazil’s growing share of reserves in Chinese yuan has replaced the Canadian dollar rather than the U.S. dollar, and we are convinced that it has no real competitor at this time,” Goldman Sachs said.

The bank explained that part of the dollar’s decline can probably be attributed to normal market forces, as treasuries fell and Asian central banks sold their dollar holdings last year to counter the rising dollar.

Goldman Sachs analysts also noted that sanctions against Russia, Brazil’s plans to create yuan clearing mechanisms, speculation about using the yuan in commodity trade, and the U.S. banking crisis and debt ceiling crisis are not enough to displace the dollar’s role in global reserves or trade.

They argue that other currencies still face many obstacles to attaining the same status as the dollar, given the depth of the capital market, trust building for access and the guiding legal framework, trade billing and currency management systems.

We previously reported that the share of euro settlements via SWIFT has fallen to its lowest since April 2020.