RESERVE CURRENCY
The U.S. dollar’s share of global reserves has remained above 50% for decades, despite gradual diversification by central banks. Countries hold U.S. dollars in their reserves for several key reasons:
Trade & Payments: US Dollar is the primary currency used in global trade
Economic Stability: Dollar reserves provide a buffer against economic shocks
Exchange Rate Management: By buying or selling dollars, central banks can influence the value of their own currencies
Safe Haven: During global uncertainty or crises, US dollar value is backed by the size and stability of the U.S. economy
Meeting International Obligations: Dollar reserves are used to meet a country’s international financial commitments
Confidence and Investor Assurance: Holding significant dollar reserves projects financial strength and stability
Inertia and Network Effects: The global financial system is deeply entrenched in the use of the dollar, making it difficult and costly for countries to shift to alternative currencies
BUYERS OF U.S. DEBT
Foreign buyers acquired $290 billion in U.S. Treasuries in February 2025, the 2nd largest monthly increase since 2011. Holdings reached a historic high of $8.82 trillion, driven by:
Japan: Added $46.6 billion, reclaiming its position as the largest foreign holder ($1.13 trillion).
Euro Area: Bought $52 billion, pushing total holdings to $1.83 trillion (all-time high),
Canada: Reversed January sales with $46.5 billion in net purchases, likely drawn by higher yields.
China: Increased holdings by $23.5 billion to $784.3 billion, signaling a partial recovery from prior selloffs.
U.S. 10-year Treasury yields (4%+) remain attractive compared to alternatives:
Germany: 2.51%
Japan: 1.20%
Canada: 3.08%
PATIENCE
As Warren Buffett noted, “The stock market transfers money from the impatient to the patient”—success favors those who let time and compounding work. History shows stocks have recovered and delivered long-term gains. Market pullbacks happen frequently, even the deepest drawdowns tend to snapback quickly.