China has reportedly sold $101.9 billion worth of US Treasury securities in the past year, according to new figures released by the Treasury Department. This represents a decline in China’s holdings, which stood at $869.3 billion in March 2020 and dropped to $767.4 billion in March 2021. China’s holdings have steadily decreased since reaching a peak of $1.31 trillion in November 2013. These latest developments come as China is moving away from the US dollar in cross-border trade and as the BRICS alliance considers launching a digital alternative to the dollar.

The Federal Reserve is paying attention to these developments. Speaking at a recent conference on the global significance of the US dollar, Fed Governor Christopher Waller stated that while the demise of the dollar is exaggerated, the role of the world’s reserve currency is evolving. He acknowledged that there has been speculation about the dollar’s demise for some time, but emphasized that the dollar remains the most widely used currency by various measures. Waller also highlighted the impact of US sanctions on foreign nations as a factor in the dollar’s continued dominance, stating that if these sanctions persist, the growth of digital currencies and changes in cross-border payments could pose challenges to the dollar’s dominant position.

In February, Waller previously stated that despite the challenges, there are few practical alternatives to the dollar for nations, as the world tends to flock to the dollar in times of global stress. He emphasized the importance of the dollar as a safe haven asset.