A seismic shift is underway in global finance. For the first time in nearly thirty years, the world’s central banks are aggressively pivoting from U.S. T-bills towards the safety of physical gold, marking a historic rebalancing of reserves.

Amid growing geopolitical instability and concerns over U.S. fiscal policy, these institutions are rethinking the safety of traditional assets. But where does the Chinese Yuan fit into this changing landscape?

This guide deciphers the motives behind this monumental trend, analyzing why gold is re-emerging as the ultimate safe haven and what this means for global markets heading into 2026.

Section 1: Executive Summary

The global financial architecture is undergoing its most significant transformation in a generation. The unipolar, economics-driven model of reserve management that defined the post-Cold War era is being supplanted by a multipolar framework where geopolitical resilience is paramount.

The New Gold Rush: A Global Shift in Wealth

In 2025, a historic rebalancing occurred. For the first time in nearly three decades, central banks hold more gold than U.S. Treasuries, signaling a profound change in global financial strategy.

2025: The Year of Gold in Numbers

The scale of central bank gold acquisition is unprecedented, fundamentally altering the landscape of global reserves and driving significant market movements.

900+ Tonnes Purchased

>40% Gold Price Gain

$48B In Treasuries Sold

1996 Last Time Gold Led

For central bank governors and reserve managers, the strategic calculus has fundamentally changed. The core question for 2026 is no longer simply how to optimize for safety and yield, but how to construct a portfolio that can withstand the pressures of great power competition, systemic financial risks, and the structural decline of a single dominant reserve currency.

This strategic shift leads to several key forecasts for the 2026 reserve landscape:

• Gold: The trend of significant net accumulation by central banks, particularly those in emerging markets, will continue unabated through 2026. Gold is being re-established not as a peripheral safe-haven asset, but as a core strategic holding, valued for its political neutrality and historical role as a store of value. 
• U.S. T-Bills: Holdings of U.S. Treasury securities will remain the largest single component of global reserves in absolute U.S. dollar terms. The unparalleled depth and liquidity of the Treasury market make it indispensable for the day-to-day functioning of the international monetary system. However, the share of U.S. dollar assets in total reserves will continue its gradual but inexorable decline from its peak of over 70% at the turn of the century to below 58%.
• Chinese Yuan: The internationalization of the Yuan will proceed at a slow pace on the global stage. Its share of allocated global reserves is forecast to remain below 5% by 2026. Structural impediments, including capital controls and a lack of market depth and transparency, will prevent its widespread adoption as a true reserve currency.

The “Hold-and-Hedge” framework thus resolves the central tension facing reserve managers. It acknowledges the operational necessity of the dollar system while simultaneously insulating the national balance sheet from its most acute long-term risks.

Table 1: Comparative Outlook for Key Reserve Assets in 2026

Attribute	Gold	U.S. T-Bills	Chinese Yuan (CNY/CNH)
Liquidity	High	Very High	Low-to-Moderate
Yield Profile (2026 Outlook)	None	Low-to-Moderate (Fed easing cycle)	Moderate (Policy-dependent)
Safety & Credit Risk	None (Physical Asset)	Very Low (Full Faith & Credit of U.S. Govt.)	Moderate (Sovereign Risk of China)
Geopolitical Neutrality	Very High	Low (Subject to U.S. Foreign Policy)	Very Low (Implies alignment with China)
Strategic Role in 2026 Portfolio	Long-term store of value; hedge against systemic, geopolitical, and currency debasement risks.	Primary liquidity instrument for FX intervention and global trade settlement.	Niche asset for trade settlement and diversification within a specific geopolitical/economic bloc.

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Section 2: The New Calculus of Reserve Management: A Paradigm Shift in a Multipolar World

The foundational principles that have guided central bank reserve management for the past three decades are being systematically dismantled. The era of a unipolar global order, underpinned by a single dominant economic and financial power, has given way to a multipolar landscape characterized by strategic competition and a growing fragmentation of the international system.

This geopolitical realignment has forced a profound reassessment of the nature of risk itself, compelling reserve managers to adopt a new calculus where political considerations now weigh as heavily as economic ones.

The Primacy of Geopolitical Risk

For years, the primary concerns of reserve managers revolved around market and credit risk—interest rate volatility, currency fluctuations, and the potential for issuer default. Today, these have been eclipsed by a more fundamental threat: geopolitical risk.

Two major industry surveys conducted in 2024 and 2025 underscore this paradigm shift. A survey by the Official Monetary and Financial Institutions Forum (OMFIF) revealed that an overwhelming 80% of responding central banks expect geopolitical risk to be the most significant factor impacting their long-term investment strategy. Similarly, a survey by Central Banking Publications identified geopolitical risk as the number one concern for reserve managers over the next 12 months.  

The “Weaponization” of Finance and the Sanctions Catalyst

The single most significant catalyst in this strategic reassessment was the decision by Western powers to freeze nearly half of Russia’s foreign exchange reserves following the 2022 invasion of Ukraine. This action demonstrated, in the starkest possible terms, that access to reserves held in foreign currencies is not an unconditional right but a privilege contingent on geopolitical alignment.

It revealed that dollar-denominated assets, long considered the ultimate safe haven, carry a profound and previously underappreciated political risk. For central banks in nations not squarely aligned with the West, this event was a watershed moment, transforming the theoretical concept of “de-dollarization” into an urgent strategic imperative.  

From Yield-Seeking to Resilience-Building

This new geopolitical reality has triggered a decisive shift in the core mandate of reserve management. The post-Global Financial Crisis (GFC) era was defined by a persistent search for yield in a world of ultra-low interest rates.

Central banks cautiously expanded their portfolios into non-traditional assets like investment-grade corporate bonds, mortgage-backed securities, and even equities in an effort to generate returns. That era is over. The primary objective in 2026 is not yield enhancement but resilience-building.  

Section 3: The Return of Gold: A Strategic Re-anchoring to Hard Assets

Against the backdrop of geopolitical fragmentation and systemic financial uncertainty, gold has re-emerged as the anchor of central bank reserve strategies.

Its ascent is not a speculative fever but a deliberate, structural reallocation by the world’s monetary authorities, who are increasingly turning to the precious metal as the ultimate neutral asset in a polarized world. This trend, which has accelerated dramatically since 2022, is fundamentally reshaping the composition of global reserves and the dynamics of the gold market itself.

An Unprecedented Demand Profile

The scale of official sector gold purchasing in recent years is without modern precedent. For three consecutive years—2022, 2023, and 2024—central banks collectively added over 1,000 tonnes of gold to their reserves annually.

This represents a dramatic acceleration from the average of 400-500 tonnes per year seen in the preceding decade. This relentless and substantial demand has been a primary driver of the gold price, helping to propel it past the historic $4,000 per troy ounce threshold in October 2025.

Key Actors and Core Motivations

The driving force behind this gold rush is a cohort of large emerging market central banks. Nations such as China, Russia, India, Turkey, and Poland have been consistently among the most significant buyers. Their motivations are multifaceted but converge on a common strategic logic.

The primary drivers, as cited by central banks themselves, are gold’s performance during times of crisis, its role as a long-term store of value and inflation hedge, and its effectiveness as a portfolio diversifier.

Gold’s Evolving Role as a Reserve Asset in 2026

The strategic re-evaluation of gold has culminated in a landmark moment for the international monetary system. In 2025, for the first time since 1996, the total value of gold held by the world’s central banks surpassed the value of their U.S. Treasury holdings. While partly a function of gold’s strong price appreciation, this crossover is symbolically and strategically profound. It signals a clear and deliberate re-prioritization among reserve managers, who are now placing a greater premium on the unique attributes of a hard, neutral asset over the yield offered by sovereign debt.  

While gold offers no intrinsic yield, this is becoming less of a disadvantage. In an environment where the Federal Reserve is expected to begin an easing cycle in 2026, the real yields on competing assets like T-Bills will moderate, reducing the opportunity cost of holding gold. Moreover, gold’s market is deep and highly liquid, making it a viable reserve asset for large-scale transactions, a critical feature for central banks.  

Section 4: The U.S. Treasury Bill: Navigating the Trilemma of Yield, Safety, and Geopolitics

Despite the powerful narrative of de-dollarization and the strategic shift towards gold, the U.S. Treasury market remains the gravitational center of the global financial system. Its role as the primary asset for central bank reserves is being challenged, but its fundamental attributes ensure that it will remain an indispensable, albeit diminishing, component of official holdings in 2026.

The story of the T-Bill is one of navigating a complex trilemma, where its unparalleled strengths are increasingly offset by growing and undeniable vulnerabilities.

The Indispensable Liquidity Engine

The preeminence of the U.S. Treasury market is built on a foundation of unmatched scale, depth, and liquidity. With over $25 trillion in outstanding securities, it is the largest and most liquid government bond market in the world.

This sheer size is a critical feature for central banks and sovereign wealth funds, which need to deploy and manage hundreds of billions, and in some cases trillions, of dollars. As noted by reserve managers, there are simply no other sovereign markets capable of absorbing such vast sums of capital without causing significant price distortions.  

A Growing Constellation of Vulnerabilities

While its operational strengths are undeniable, the long-term strategic case for holding U.S. Treasuries is being steadily eroded by a confluence of risks.

• Fiscal Profligacy and Debt Sustainability: The most significant long-term vulnerability is the trajectory of U.S. fiscal policy. As of late 2025, U.S. federal debt held by the public stood at approximately $28.9 trillion, a figure that continues to climb.
• Policy and Political Uncertainty: The strategic landscape for Treasury holders has been complicated by a rise in U.S. policy uncertainty. The implementation of sweeping reciprocal tariffs in April 2025 under the Trump administration, coupled with public debates surrounding the independence of the Federal Reserve, has introduced a new layer of political risk into what was once considered a purely economic calculation.
• The Structural Decline in Foreign Ownership: The data clearly illustrates a strategic, long-term shift away from U.S. debt by foreign official holders. While the absolute dollar value of foreign holdings has increased due to the massive expansion of U.S. debt issuance, the share of U.S. public debt held by foreigners has been in a structural decline.

The Outlook for T-Bills in 2026

The environment for U.S. Treasuries in 2026 will be shaped by a moderating U.S. economy. After a temporary spike in inflation in 2025, price pressures are expected to subside over 2026, returning toward the Federal Reserve’s target by the end of the year.

This disinflationary trend, combined with a resilient labor market, is expected to lead the Fed to deliver two interest rate cuts in 2026, following a single cut in 2025. This monetary easing will make the yields on T-Bills and other Treasury securities less attractive on a relative basis, particularly as other developed market central banks may be on a different policy path. J.P. Morgan research projects the benchmark U.S. 10-year Treasury yield to trade within a 3.75% to 4.50% range during this period.  

This complex situation creates what can be described as a “T-Bill Trilemma” for central bank reserve managers. They are forced to balance three desirable but conflicting objectives: Liquidity, Sovereignty, and Value Preservation.

1. The Liquidity Imperative: To function effectively in the global economy, central banks must hold the world’s most liquid asset, the U.S. T-Bill. This is a non-negotiable operational requirement.
2. The Sovereignty Imperative: As the freezing of Russia’s reserves demonstrated, holding T-Bills subjects a nation’s wealth to the foreign policy decisions of the United States, creating a significant sovereignty risk.
3. The Value Preservation Imperative: Holding T-Bills exposes a nation to the long-term risk of currency debasement driven by unsustainable U.S. fiscal policies and a ballooning national debt.

Section 5: The Yuan’s Long March: Ambition vs. Reality in the Quest for Reserve Status

China’s ambition to establish the Renminbi (RMB), or Yuan, as a major international currency is a cornerstone of its long-term economic and geopolitical strategy. The goal is clear: to reduce its own dependence on the U.S. dollar-dominated financial system, enhance its global economic stature, and insulate itself from the reach of U.S. financial sanctions.

However, a sober, data-driven assessment of the Yuan’s progress reveals a significant gap between this ambition and the current reality. For 2026, the Yuan will continue its long march, but its role will be that of a regional and bloc-specific asset, not a global challenger for reserve currency supremacy.  

The Reality: A Still-Minor Player on the Global Stage

Despite these concerted efforts, the Yuan’s penetration of global finance remains remarkably shallow. The most definitive measure of a reserve currency’s status is its share of allocated global reserves, and here the data is unequivocal. According to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) data for the second quarter of 2025, the Chinese Renminbi’s share of allocated reserves stood at a mere 2.12%.

Deep-Seated Structural Impediments

The Yuan’s failure to gain significant global traction is not due to a lack of effort but to fundamental, structural barriers that are antithetical to the requirements of a true global reserve currency.

• Capital Controls and a Managed Exchange Rate: The primary impediment is China’s partially closed capital account. Unlike the dollar or the euro, the RMB is not a freely floating currency. The People’s Bank of China (PBoC) tightly manages its value, setting a daily fixing rate against the U.S. dollar within which it is allowed to trade. Furthermore, significant restrictions remain on the free flow of capital into and out of the country. For a central bank reserve manager, the ability to move vast sums of money into and out of an asset without restriction, delay, or permission is a non-negotiable prerequisite. The Yuan’s lack of full convertibility and the ever-present risk of administrative intervention make it an unattractive proposition as a primary store of value.  
• Lack of Market Depth, Liquidity, and Trust: The financial markets for Yuan-denominated assets, particularly Chinese government bonds, lack the depth, liquidity, and transparency of the U.S. Treasury market. While growing, they are not yet capable of absorbing the massive inflows and outflows that characterize global reserve management. Beyond these technical aspects lies a more profound issue of trust. Global investors and official institutions remain wary of the supremacy of the state over the rule of law in China, creating concern about the potential for arbitrary government actions that could impact the value or accessibility of their assets.  

The Outlook for the Yuan in 2026

Given these enduring structural barriers, the Yuan will not be a significant destination for the diversification of central bank reserves on a global scale in 2026. Its share of global reserves is unlikely to move materially beyond the 2-3% range. Instead, its use will continue to grow, but this growth will be highly concentrated within a specific sphere of influence.

It will become an increasingly important currency for bilateral trade settlement with China and for nations that are politically and economically aligned with Beijing. It will function as the financial lubricant for a Sino-centric economic bloc, but it will not achieve the status of a globally accepted, freely usable store of value.

Section 6: De-Dollarization in Focus: Separating Cyclical Trends from Structural Shifts

The term “de-dollarization” has moved from the fringes of economic debate to the center of strategic discussions in finance ministries and central banks worldwide. It represents a megatrend that will define the evolution of the international monetary system for the next decade.

A comprehensive analysis requires separating short-term, cyclical fluctuations in the dollar’s value from the deep, structural shifts that are slowly but surely eroding its dominance. This process is not leading to the crowning of a new currency king, but rather to the emergence of a more fragmented, multipolar system where gold is playing an increasingly pivotal role.

Quantifying the Structural Decline

The gradual decline of the U.S. dollar’s role as the world’s primary reserve asset is a multi-decade phenomenon, clearly visible in the IMF’s authoritative COFER data. At the turn of the millennium, the U.S. dollar accounted for over 71% of globally allocated foreign exchange reserves.

By the second quarter of 2025, that share had fallen to approximately 58.4%. This is not a short-term trend driven by interest rate differentials or cyclical economic performance, which can cause temporary dollar weakness. Rather, it is a persistent, structural shift reflecting the changing balance of global economic power and a deliberate policy of diversification by central banks.  

The Rise of a Multipolar Currency System

Crucially, the decline of the dollar is not paving the way for the rise of a single successor. The international monetary system is not transitioning from a dollar standard to a Yuan standard or a euro standard. Neither of these currencies currently possesses the complete set of attributes required to assume the dollar’s global role.

The euro, while the second-largest reserve currency, is hampered by the political and economic fragmentation of the Eurozone, which undermines its appeal as a true safe-haven asset. As previously detailed, the Chinese Yuan is constrained by capital controls and a lack of market depth and trust.  

Gold: The Primary Beneficiary of Diversification

In this emerging multipolar system, gold is re-establishing its historical role as the ultimate neutral monetary asset. As central banks diversify away from the U.S. dollar but find no single currency alternative compelling enough to replace it, they are increasingly turning to gold. It is the one asset that stands outside of any national political or financial system. It is not a liability of any government and cannot be devalued by the printing press of any central bank.  

Gold thus serves as the common denominator in a fragmented world—a trust-minimized asset that can act as a bridge and a backstop between competing currency blocs. Its accumulation by central banks is a direct consequence of the decline of the unipolar dollar system. The more uncertain the future of the dollar becomes, and the less viable the alternatives appear, the more compelling the case for gold as the ultimate store of value and guarantor of monetary sovereignty. It is the primary beneficiary of the strategic vacuum created by de-dollarization.

Table 2: The Shifting Landscape of Global FX Reserves (Share of Allocated Reserves, %)

Currency/Asset	Share in 2000	Share in 2015	Share in Q2 2025
U.S. Dollar	71.2%	65.7%	58.4%
Euro	18.3%	19.1%	21.1%
Gold (Valuation as % of total reserves)	~10%	~12%	~18%
Japanese Yen	6.1%	4.0%	~6.0%
British Pound	2.8%	4.7%	~5.0%
Chinese Yuan	N/A	1.1%	2.1%
Other Currencies	1.6%	5.4%	~17.4%

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Sources: IMF COFER data , World Gold Council, Visual Capitalist , Man Group. Note: Gold valuation is an estimate based on market prices and reported holdings; it is not included in the IMF’s currency composition data but is shown for strategic context. “Other Currencies” includes AUD, CAD, CHF, and unallocated reserves.  

Section 7: Strategic Outlook for 2026: Allocating for Resilience and Return

The confluence of geopolitical fragmentation, persistent fiscal imbalances in the West, and the structural trend of de-dollarization has created a new and challenging landscape for central bank reserve management. The strategies of the past are no longer sufficient for the complexities of the future.

As we look to 2026, the dominant paradigm will be one of strategic diversification and proactive risk mitigation, designed to build portfolios that are resilient to both economic and political shocks. The central question posed by this report—Gold, Yuan, or T-Bills?—finds its answer not in a binary choice, but in a sophisticated and evolving allocation that reflects a world in transition.

The Model 2026 Central Bank Portfolio

The archetypal central bank portfolio in 2026 will be a carefully balanced construct, reflecting the “Hold-and-Hedge” strategy and the trilemma of liquidity, sovereignty, and value preservation. Its composition will be guided by the following principles:

• A Core Allocation to U.S. T-Bills: Despite all its vulnerabilities, the U.S. Treasury market will remain the bedrock of global reserves. A substantial core allocation, likely still representing the largest single portion of the portfolio for most central banks, will be maintained in short-term U.S. government debt. This is not an expression of confidence in the long-term outlook for the dollar, but a pragmatic acknowledgment of an operational necessity. The unparalleled liquidity of the Treasury market is indispensable for managing daily currency interventions and facilitating global trade flows.  
• A Growing Strategic Allocation to Gold: The most significant change in portfolio construction will be the continued elevation of gold to a core strategic asset. The allocation to physical gold, increasingly repatriated or held in trusted domestic locations, will continue to grow. This holding serves as the primary hedge against the systemic risks inherent in the dollar-based system: the long-term risk of currency debasement from U.S. fiscal deficits and the immediate geopolitical risk of sanctions or asset freezes. It is the portfolio’s anchor of sovereignty.  
• Tactical Diversification into Other Assets: To capture modest yield and further diversify currency exposure, central banks will maintain tactical allocations to other high-quality sovereign bonds, such as UK Gilts and Italian BTPs, as well as the debt of other G7 nations. Some of the more sophisticated reserve managers will also continue to hold modest positions in investment-grade corporate credit and securities issued by supranational organizations, including a growing focus on green and ESG-linked bonds.  
• A Niche, Politically-Driven Allocation to the Yuan: For a specific and growing subset of central banks—primarily those in nations with deep economic and political alignment with Beijing—the Chinese Yuan will become an increasingly important, albeit still small, part of the portfolio. This allocation is driven less by traditional reserve management criteria (liquidity, safety) and more by the strategic imperative of facilitating bilateral trade and participating in a non-dollar financial ecosystem.  

Broader Implications for the Global Financial System

This strategic shift in central bank asset allocation will have profound and lasting implications for the global financial system:

The Flip Side: Unwinding Treasury Holdings

The accumulation of gold is directly linked to the reduction of U.S. Treasury holdings. Central banks sold a net $48 billion in the first half of 2025 alone, pushing foreign-held reserves to their lowest levels since 2017.

• Sustained Structural Demand for Gold: The ongoing, price-insensitive buying from the official sector will continue to act as a powerful support for the gold price. This structural bid fundamentally alters the market for gold, reducing downside volatility and reinforcing its status as a core holding for both public and private investors. Forecasts for prices to remain elevated through 2026 are well-supported by this dynamic.  
• Persistent Headwinds for the U.S. Dollar: While a sudden collapse of the dollar is highly unlikely, the gradual erosion of its reserve status will continue. The strategic diversification by the world’s largest asset managers (central banks) will exert a persistent, long-term downward pressure on the dollar’s value against a broad basket of assets, most notably gold. This could lead to a prolonged period of dollar depreciation, similar to the 2002-2008 cycle.  
• Deepening Financial Fragmentation: The trends outlined in this report point towards an irreversible fragmentation of the global financial system. The world is moving away from a single, integrated, dollar-centric model towards a multipolar reality with at least two major, and not always interoperable, spheres of influence: the established dollar-based system and an emerging Yuan-centric one. Gold will increasingly serve as the neutral asset used to settle imbalances between these blocs.

Conclusion

In conclusion, the question of where central banks will park their cash in 2026 is not an “either/or” proposition between Gold, the Yuan, and T-Bills. The answer is a complex and dynamic allocation strategy that seeks to balance the irreconcilable demands of a new global era. Central banks are not abandoning one asset in favor of another; they are strategically combining them to construct resilient portfolios capable of navigating the financial and geopolitical crosscurrents of a multipolar world.

U.S. T-Bills will be held out of necessity for their liquidity. The Yuan will be held by a select few out of strategic alignment. But the clearest and most decisive winner in this global monetary realignment is gold. It is being systematically re-established as the ultimate neutral reserve asset—a timeless anchor of value and sovereignty in an age of unprecedented uncertainty. The great reallocation is underway, and its primary destination is the oldest and most trusted form of money.