According to a new UBS Asset Management survey, central banks across the globe are expressing growing skepticism about the long-term stability of the U.S. financial system. Nearly 67% of reserve managers surveyed fear for the Federal Reserve’s independence, and close to half now believe the U.S. rule of law may deteriorate to a point that could influence future asset allocation.

A major catalyst for this sentiment was the implementation of the April 2 “Liberation Day” tariffs, which triggered volatility across currency and bond markets. These measures shook investor confidence and intensified broader concerns over America’s economic policy direction and fiscal discipline.

UBS’s Max Castelli, Head of Global Sovereign Markets Strategy, emphasized how significantly these developments have shifted global perspectives. “It’s clear that political moves like Liberation Day are changing how reserve managers view the reliability of U.S. assets,” he said.

In light of these events, 29% of reserve managers are actively considering cutting exposure to U.S.-based assets. This includes Treasury securities, which have come under scrutiny following discussions about unconventional instruments like ultra-long, zero-coupon bonds. Over the coming year, a net 25% of respondents said they would decrease their dollar holdings.

While the dollar remains the leading reserve currency—still expected to hold its dominance by 80% of respondents—its status is slowly being challenged. The Chinese renminbi appears to be gaining momentum, with 25% of central banks planning to expand their holdings in the next year. In comparison, the euro saw limited enthusiasm, with only 6% of respondents expecting to increase allocations.

At the same time, gold is emerging as a strategic hedge against geopolitical and institutional risk. About 52% of reserve managers are looking to boost their gold reserves, while 39% plan to repatriate gold stored abroad, particularly from U.S. vaults—a move largely driven by concerns over potential sanctions and political interference.

Looking further ahead, the euro, renminbi, and cryptocurrencies are predicted to benefit most from global shifts in asset allocation over the next five years. The U.S. dollar, having topped this list previously, has now fallen to ninth place.

Castelli summarized the sentiment by noting, “The dollar isn’t disappearing, but it is being weighed against more diversified and politically neutral alternatives.”