Dollar's Reserve Currency Status Loss Could Cost U.S. $300 Billion Annually, Study Shows

According to a World Bank report released on July 28, researchers from NYU Stern and the economic think tank CEPR found that if foreign investors cease demands for U.S. dollar assets, the United States would lose approximately $300 billion annually in seigniorage benefits, equivalent to roughly 1% of GDP.

The study also projects the dollar's real value would permanently decline 8.8%, U.S. Treasury yields would rise 87 basis points, and private debt interest rates would increase 72 basis points. The findings reflect growing concerns among global investors about sustained U.S. fiscal deficits despite ongoing Treasury issuance. Data shows foreign investors' share of U.S. Treasury holdings has declined from 45% to 30% over the past decade.