THE GOLDEN BRIDGE TO MONETARY MULTIPOLARITY / PROJECT SYNDICATE

The Golden Bridge to Monetary Multipolarity

Gold has overtaken US Treasuries as the world’s top reserve asset because it offers a solution to the challenges of a rogue America. But its renewed relevance also reflects how rapid technological diffusion and increasing dispersion of economic power are creating a more diversified international monetary system.

Hippolyte Fofack

MONTREAL—One clear sign of de-dollarization and the shift toward a multipolar monetary order is gold’s renewed prominence in global financial markets. 

Investors increasingly view the metal as a strategic asset; central banks are buying record amounts of it to bolster resilience against financial and geopolitical risks, with last year marking the fourth-largest expansion of gold reserves on record. 

The Dutch central bank’s decision to move much of its gold reserves out of the United States, citing “geopolitical unrest,” is but the latest example of this trend.

Market reactions to US Treasury Secretary Scott Bessent’s intervention in bond markets after the sharp selloff in longer-dated US debt and the resulting higher yields in the usually quiet month of August further support the perception of gold as the ultimate safe-haven asset. 

Bessent’s intervention sparked a sharp drop in the dollar and a massive rally in gold prices.

This follows the European Central Bank’s confirmation in June that gold had overtaken US Treasuries as the world’s top reserve asset. 

That status seems likely to harden and spread. 

According to a recent survey by the Official Monetary and Financial Institutions Forum, more central banks plan to decrease their dollar holdings than to increase them over the next decade. 

The World Gold Council’s 2026 Central Bank Gold Reserves survey reports similar findings, with 74% of respondents anticipating moderate or significantly lower dollar reserves over the next five years.

It is, of course, unlikely that a new global monetary hegemon will replace the dollar any time soon, especially in a digital age marked by rapid technological diffusion and increasing dispersion of economic power. 

Instead, the slow retreat from the greenback signals the emergence of a more diversified international monetary system in which several currencies—the dollar, the euro, and the renminbi—play important roles, particularly in central-bank reserve holdings. 

In such a system, gold serves as the politically neutral reserve asset linking competing monetary blocs.

Central banks, sovereign wealth funds, and institutional investors have begun to prioritize capital preservation over high returns, mainly because high-yield investments lose their appeal if the underlying assets are at risk of becoming inaccessible during periods of conflict or instability. 

Gold, whose relationship with the dollar’s trade-weighted exchange rate is typically negative, carries no sovereign counterparty risk, making it a superior hedge against the challenges of a rogue America and geopolitical turbulence.

Geopolitical risks have transformed the international monetary system from a neutral infrastructure that facilitates global commerce and cross-border investment into an arena of strategic competition, fundamentally altering the risk-return balance and elevating national security from a peripheral concern to a threshold condition for investment decisions. 

Strong demand for gold reflects a broader transformation in global finance, marked by a shift from financial claims to tangible ownership, from efficiency to resilience, and from dependence on a single reserve currency to a more diversified and strategically balanced monetary order.

This reassessment of sovereign risk has certainly influenced the People’s Bank of China’s reserve strategy. 

In July, the PBOC increased its gold reserves for the 21st consecutive month to 76.08 million troy ounces. 

Meanwhile, China is building up its physical gold inventories in Hong Kong, which recently launched a gold clearing and settlement system on a trial basis, and has limited retail investors’ access to precious-metals trading.

China’s shift toward holding physical gold underscores the evolution of the metal’s function, from a financial asset to a strategic monetary asset. 

In addition to reducing dollar exposure, gold’s larger role in the management of the country’s currency reserves also promises to strengthen trust in the renminbi and reinforce confidence in the PBOC’s balance sheet. 

It also seems aimed at boosting efforts to facilitate the renminbi’s broader use, including through bilateral currency-swap agreements, trade-settlement mechanisms, and debt issuances, with the market for renminbi-denominated debt instruments (offshore “dim sum” and onshore “panda” bonds) rapidly expanding.

But China’s push to promote the renminbi does not mean that the currency is capable of unseating the dollar. 

The renminbi remains subject to capital controls and lacks the financial depth to compete with the greenback globally.

Similarly, recent initiatives to internationalize the euro, most notably the expansion of the enhanced Eurosystem repo facility for central banks and the growing issuance of euro-denominated debt, have been relatively successful, with it becoming the leading currency in the green and sustainable international bond market in 2025. 

But still, the euro cannot hope to fill the dollar’s global shoes, owing to structural and institutional barriers, notably the lack of a unified fiscal policy and deep, seamless capital markets.

Even so, gold complements the rise of rival currencies and supports diversification by providing a common store of value that is accepted without regard to geopolitical alignment or other monetary arrangements. 

Thus, its ascent reflects efforts—including local-currency settlement between BRICS members and cross-border payment systems in Asia and elsewhere—to deepen regional integration and reduce dependence on the dollar for trade and investment.

Digital technologies that enable the circumvention of traditional correspondent banking networks add another dimension to gold’s renewed relevance. 

Central bank digital currencies and real-time payment infrastructure enable the creation of a decentralized monetary system in which multiple currencies coexist, forming the backbone of a new global financial system for the digital age. 

Yet technology cannot replace the need for trust: gold continues to provide the universal credibility that underpins confidence during periods of structural change.

While conventional wisdom that “there is no alternative” to the dollar still holds, the process of de-dollarization was never expected to be abrupt. 

Global redistribution of monetary influence will almost surely be gradual and cumulative, mirroring the realignment of economic power.

The case for gold—the ultimate neutral reserve asset, trusted by all countries and controlled by none—as a shield against geopolitical and financial shocks remains undeniable. 

But it is hardly the only reason for embracing the metal. 

In the face of a huge technological revolution and a global economic reordering, authorities are also seeking to strengthen their monetary sovereignty and end reliance on any single reserve currency.

This structural transformation of the international monetary system is the deeper and more enduring driver of demand for gold, suggesting that strong demand for the metal, which serves as the natural bridge to monetary multipolarity, is here to stay. 

As Shakespeare’s Cloten rightly observes about gold in Cymbeline: “what can it not do and undo?”

Hippolyte Fofack, a former chief economist at the African Export-Import Bank, is Parker Fellow at the Sustainable Development Solutions Network at Columbia University, a research associate at Harvard University’s Center for African Studies, a distinguished fellow at the Global Federation of Competitiveness Councils, and a fellow at the African Academy of Sciences.