The perceived threat to the dollar and the Treasury market from central banks adopting IMF Special Drawing Rights (SDR) as a reserve currency is a red herring – the main danger is the collapse in global reserves, says Steve Barrow, strategist at Standard Bank.
“With about $2,000bn of Treasuries owned by foreign official institutions, mainly central banks, it’s easy to see why the Treasury market and the dollar freak out when central banks talk about diversification, or wanting an SDR-based currency system,” he says.
