Anchors of Global Currencies: The Evolution of Currency Anchors in the Post-Bretton Woods Era

This paper explores the distribution and evolution of international currencies from the perspective of the evolution of currency anchors over the fifty years since the collapse of the Bretton Woods system. We have four key findings. First, despite various phases of de-dollarization, the US dollar (USD) has maintained its dominant position as an international currency, acting as both the pegged and reference currency for most economies. Substantive de-dollarization has not materialized. Currently, the real USD anchor index surpassed 45%, and it has at times surpassed 60% in emerging markets and developing countries (EMDCs), as well as in economies with non-floating exchange rate regimes. Second, following the onset of US-China trade tensions in 2018, the weight of the USD within the Renminbi (RMB) currency basket declined markedly. By 2024, its share had dropped to approximately 50 percent, while the Japanese yen (JPY), British pound (GBP), and euro (EUR) emerged as key components of the basket. Third, since 2020, the global monetary system has continued to exhibit a “one dominant, multiple strong” structure, although the relative standing of these strong currencies has shifted. The EUR’s influence has declined, whereas the RMB has gained prominence. Fourth, the RMB has emerged as a reference currency for over 80 economies, with its nominal anchor index exceeding 13%, ranking third globally after the USD and the EUR. However, in real terms, its share stands at only 8 percent, which is lower than that of both the GBP and the JPY, placing it fifth globally. To support a sustainable path toward RMB internationalization, the Chinese government may continue to prioritize economic development by pursuing high-level opening-up and cultivating structural external demand for the RMB through genuine real-sector integration. • Develops a unified framework to measure global currency anchors over time. • Documents the evolution of major currency anchors after Bretton Woods. • The U.S. dollar remains the dominant anchor across monetary cycles. • Anchoring patterns differ between advanced and emerging economies. • The RMB’s anchoring role has strengthened but remains distinct from major anchors.