UBS survey reveals central banks may reduce US asset investments if Fed loses independence

According to a UBS survey, two-thirds of central banks are concerned that political pressure in the US could threaten the Federal Reserve’s independence. Nearly half of them say this might even lead them to rethink their holdings in US assets.

The UBS findings point to growing doubts about the dollar’s ability to maintain its status as the world’s leading reserve currency. These concerns are fueled by President Donald Trump’s trade and political disputes with allies, as well as his attempts to influence the Fed’s interest rate decisions.

Still, nearly 80% continue to view the dollar as the dominant reserve currency. Long-term, however, the euro is poised to gain the most from shifting global dynamics. Yet only 6% of respondents plan to boost their euro reserves in the coming year, UBS reports.

At the same time, interest in gold is on the rise. For instance, 52% of central banks have expressed plans to increase their gold holdings, while 39% intend to store most of their reserves domestically, aiming to safeguard their assets from potential US restrictions.