The IMF is ramping up preparations for a potential rapid decline of the US dollar, as its share of global reserves continues to shrink, prompting renewed focus on alternative safe assets and international financial stability measures.
IMF officials have intensified preparations for a scenario in which the U.S. dollar comes under rapid and severe market pressure, signalling a strategic shift in global financial surveillance. Speaking at a high-level forum hosted by the Brussels-based think-tank Bruegel, IMF Managing Director Kristalina Georgieva said the Fund is “building the muscle” to model and assess hypothetical episodes of intense volatility, including a swift sell-off of dollar-denominated assets. She described the exercise as stress-testing the world economy against “unthinkable events,” and framed it as a proactive effort to reduce systemic risk rather than a reactive response to market turbulence.
Those preparations come amid a pronounced weakening of the dollar since the start of 2025. The IMF briefing provided a snapshot of recent moves: the currency has fallen roughly 9% against a major currency basket and about 12% versus the euro since January 2025, while its share of global foreign exchange reserves has slid from about 72% in 2001 to just under 57% today. The shifts reflect a mix of structural and political drivers, from diversification by central banks to investor concerns about U.S. policy choices.
Private-sector research paints a similar picture. According to Morgan Stanley, the dollar lost approximately 11% against other major currencies in the first half of 2025, terminating a 15-year appreciation cycle. Morgan Stanley Research projects further weakness into 2026, forecasting an additional decline of around 10% by the end of next year and anticipating the dollar index could fall to the mid-90s by the second quarter of 2026 before any rebound later in the year. The bank points to trade frictions, especially aggressive tariff measures, policy uncertainty and shifts in investor hedging behaviour as principal drivers.
The erosion of confidence in dollar assets has elevated demand for alternative safe havens. Market moves have pushed bullion to unprecedented levels, with gold reaching a record price of $5,100 per troy ounce in the coverage provided. That surge, seen by analysts as a barometer of investor unease, underlines the premium placed on liquid, high-quality instruments during episodes of acute market stress.
Georgieva argued that a credible pool of high-grade securities beyond U.S. Treasury paper would help stabilise global portfolios and support orderly capital allocation. She advocated the issuance of common European debt as one such alternative, saying joint issuance could supply a trusted, deep asset class that investors can “buy and hold and enjoy.” According to the IMF, European common bonds would not only furnish a high-quality store of value but could also help close the investment shortfall within the European Union and bolster growth, though political hurdles among member states remain substantial.
At the same time, the fragmentation of the monetary order is evident. Initiatives led by BRICS countries to reduce reliance on the dollar are widening the set of reserve options for sovereigns seeking insurance against sanctions or geopolitical entanglements. Market participants and policy-makers are therefore confronted with two interacting trends: deliberate policy-driven diversification and market-led reallocation prompted by perceived changes in U.S. governance and monetary credibility.
The IMF’s enhanced scenario work aims to give central banks and international institutions a common analytical platform to manage these transitions. By modelling extreme but plausible stress events, the Fund hopes to improve readiness for sudden capital flow reversals and to identify measures, liquidity provision, coordinated asset purchases, or alternative benchmark issuance, that could limit spillovers. Whether such tools will be sufficient to offset the structural forces reshaping reserve preferences will depend on political choices in major jurisdictions and on how quickly new instruments can attain the depth and legal clarity investors demand.
Industry forecasts and the IMF’s increased surveillance both underscore that the composition of global safe assets is in flux. For now, policymakers and investors are adjusting allocations and contingency plans, with the prospect of more formalised non-dollar instruments emerging as a central element of the debate about financial stability in the years ahead.
- https://www.stvincenttimes.com/woes-deepen-as-imf-prepares-for-global-run-on-us-dollar/ – Please view link – unable to able to access data
- https://www.morganstanley.com/insights/articles/us-dollar-declines – In the first half of 2025, the U.S. dollar experienced a significant depreciation, losing approximately 11% against other major currencies, marking the largest decline in over 50 years. This downturn ended a 15-year bull cycle for the dollar. Morgan Stanley Research forecasts that the dollar could lose an additional 10% by the end of 2026. Factors contributing to this decline include trade tensions, particularly aggressive tariff policies, and policy uncertainties. Foreign investors have been adding hedges to their exposure to U.S. assets, which is likely to further weaken the dollar.
- https://www.morganstanley.com/insights/articles/us-dollar-decline-continues-through-2026 – Morgan Stanley Research projects that the U.S. dollar will continue to weaken through mid-2026 before potentially rebounding in the latter half of the year. The U.S. dollar index, currently around 100, is expected to fall to 94 in the second quarter of 2026, the lowest since 2021. The dollar’s performance is closely tied to the outlook for U.S. growth and Federal Reserve interest rates. Labor market uncertainty and changes in the Federal Open Market Committee composition could add negative pressure on the currency in the medium term.
- https://www.morganstanley.com/im/en-us/financial-advisor/insights/articles/what-is-fueling-the-depreciation-of-the-dollar.html – Morgan Stanley identifies several factors contributing to the depreciation of the U.S. dollar. The dollar index fell about 11% from January through June 2025, marking the end of a structural bull cycle that began in 2010. Despite a 3.2% recovery in July, the decline is expected to continue, with an additional 10% loss projected by the end of next year. Contributing factors include trade tensions, particularly aggressive tariff policies, and policy uncertainties. Foreign investors have been adding hedges to their exposure to U.S. assets, which is likely to further weaken the dollar.
- https://www.morganstanley.com/insights/articles/us-dollar-decline-continues-through-2026 – Morgan Stanley Research projects that the U.S. dollar will continue to weaken through mid-2026 before potentially rebounding in the latter half of the year. The U.S. dollar index, currently around 100, is expected to fall to 94 in the second quarter of 2026, the lowest since 2021. The dollar’s performance is closely tied to the outlook for U.S. growth and Federal Reserve interest rates. Labor market uncertainty and changes in the Federal Open Market Committee composition could add negative pressure on the currency in the medium term.
- https://www.morganstanley.com/insights/articles/us-dollar-declines – In the first half of 2025, the U.S. dollar experienced a significant depreciation, losing approximately 11% against other major currencies, marking the largest decline in over 50 years. This downturn ended a 15-year bull cycle for the dollar. Morgan Stanley Research forecasts that the dollar could lose an additional 10% by the end of 2026. Factors contributing to this decline include trade tensions, particularly aggressive tariff policies, and policy uncertainties. Foreign investors have been adding hedges to their exposure to U.S. assets, which is likely to further weaken the dollar.
- https://www.morganstanley.com/insights/articles/us-dollar-decline-continues-through-2026 – Morgan Stanley Research projects that the U.S. dollar will continue to weaken through mid-2026 before potentially rebounding in the latter half of the year. The U.S. dollar index, currently around 100, is expected to fall to 94 in the second quarter of 2026, the lowest since 2021. The dollar’s performance is closely tied to the outlook for U.S. growth and Federal Reserve interest rates. Labor market uncertainty and changes in the Federal Open Market Committee composition could add negative pressure on the currency in the medium term.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The article was published on 1 February 2026. Similar reports from reputable sources, such as EurActiv on 27 January 2026, indicate that the IMF is preparing for scenarios involving a rapid sell-off of US dollar-denominated assets. ([eurasiareview.com](https://www.eurasiareview.com/27012026-imf-prepares-for-global-run-on-us-dollar?utm_source=openai)) The St. Vincent Times article appears to be a timely report on this developing situation. However, the St. Vincent Times is a niche publication, which may affect the freshness score.
Quotes check
Score:
7
Notes:
The article includes direct quotes from IMF Managing Director Kristalina Georgieva, such as her statement about building the muscle to model and assess hypothetical episodes of intense volatility. These quotes are consistent with statements made by Georgieva at the Bruegel forum on 26 January 2026. ([eurasiareview.com](https://www.eurasiareview.com/27012026-imf-prepares-for-global-run-on-us-dollar?utm_source=openai)) However, the St. Vincent Times article does not provide direct links to these statements, which raises concerns about the verifiability of the quotes.
Source reliability
Score:
5
Notes:
The St. Vincent Times is a niche publication with limited reach and may not have the same editorial standards as major news organisations. While it provides timely reporting, the lack of direct links to primary sources and the absence of corroboration from other reputable outlets raise concerns about the reliability of the information presented.
Plausibility check
Score:
8
Notes:
The article’s claims about the IMF’s preparations for a potential run on US dollar-denominated assets align with recent developments, including the IMF’s increased surveillance and scenario modelling. However, the St. Vincent Times article does not provide specific details or direct links to these developments, which makes independent verification challenging.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
While the article from the St. Vincent Times reports on the IMF’s preparations for a potential run on US dollar-denominated assets, it lacks direct links to primary sources and independent verification from other reputable outlets. The reliance on a niche publication with limited reach and the absence of corroboration from major news organisations raise concerns about the accuracy and reliability of the information presented. Therefore, the overall assessment is a FAIL with MEDIUM confidence.