Barry Eichengreen: US Treasury fragility signals a turning point for the dollar

Eichengreen’s shift in perspective is rooted in a specific realization from April 2025. While he previously viewed the dollar’s decline as a slow, predictable drift—dropping from 70% of global reserves at the turn of the century to just under 60% today—he now fears an abrupt loss of market confidence. This anxiety is fueled by what he characterizes as desperate measures from Washington, including recent Treasury interventions and efforts to manage borrowing costs, which he argues fail to mask underlying market fragility.

Data suggests the dollar’s lost dominance has not been captured by the euro or the renminbi, but by smaller, well-managed economies like those of Canada, Australia, and Singapore. The euro remains hampered by fragmented, siloed bond markets that lack the scale of US debt. Meanwhile, Eichengreen remains critical of the US government's "GENIUS Act," suggesting that betting on private-label stablecoins is a strategic misstep. He argues that history favors central bank-backed digital currencies, and by ignoring this shift, the United States risks further isolating its financial infrastructure from a changing global landscape.