In his speech to the House of Representatives Financial Services Committee, Federal Reserve Chairman Jerome Powell stated that he expects the US dollar to remain the world’s reserve currency. Powell stated that the US’s ability to maintain this status largely depends on factors such as democratic institutions, the rule of law and strong price stability. He also pointed out that the share of the dollar in official foreign exchange reserves has decreased in recent years.
Emphasizing that the features of the USA, such as the rule of law, price stability, strong democratic institutions and open capital accounts, do not come together in any other country, Powell said that he believes that the USA can remain as a reserve currency as long as it preserves these features.
The dollar’s share of official foreign exchange reserves fell to 58 percent in the fourth quarter of 2022, the lowest level in 20 years, according to International Monetary Fund data.
