U.S. dollar to remain dominant currency; euro, renminbi rising gradually - UBS survey

The U.S. dollar will remain the world's leading reserve currency over the next 25 years, with the euro and renminbi expected to further increase their share of total central bank reserves, according to UBS' survey of sovereign institutions including major central banks.

Global reserves are assets of central banks held in different currencies primarily used to back their liabilities. Central banks have bought and sold international reserves to influence exchange rates. The dollar currently represents about 60%-65% of global currency reserves reported by central banks to the International Monetary Fund.

That share may come down a bit over the next two decades, only because central bank managers would want to raise their holdings of other reserve currencies such as the euro and renminbi, said Massimiliano Castelli, head of strategy and advice, global sovereign markets, at UBS Asset Management and one of the authors of the report.

The euro and renminbi are likely to boost their share of global reserves, but at a gradual pace, UBS said. The euro's share was around 20% at the end of the second quarter, IMF data showed, while the renminbi was at roughly 2%.

The UBS report noted that the dollar remains the "ultimate safe-haven currency" and during periods of intense global risk, investors flock to U.S. Treasuries.