Global reserve holdings in dollars have slid from roughly 70% to around 50% over the past few decades. "De-dollarization" headlines resurface with every new round of sanctions and every BRICS summit. So the question on every emerging-market investor's mind is legitimate: does it still make sense to hold dollars in your portfolio in 2026? Janet Yellen — former Fed Chair and former U.S. Treasury Secretary — stepped onto the stage at Expert XP 2026 in São Paulo to address exactly that tension. Her answer was unambiguous.
The line that summarizes her speech: "There is no currency that can replace the dollar. No other market has its depth and liquidity." Yellen's message is not that the dollar is eternal — it's that there is no candidate ready to take its place.
Why the Dollar Still Dominates
Dollar supremacy is not a political accident or a military imposition. It rests on a financial architecture that no other country has managed to replicate. Four structural pillars explain the inertia:
1. The depth and liquidity of the Treasury market. The U.S. government bond market is the largest and most liquid on earth — trillions of dollars that a central bank, insurer, or sovereign wealth fund can buy or sell without meaningfully moving the price. When a country accumulates reserves, it needs a safe and enormous place to park capital. No yuan, euro, or yen market combines that scale and that liquidity. That is what Yellen meant by "depth."
2. The dollar-denominated settlement network. The global payment infrastructure — from SWIFT to the Fed's swap lines that provide emergency dollar liquidity to foreign central banks — is built around the dollar. Switching rails is expensive, slow, and requires coordination between countries that often distrust each other.
3. Commodities priced in dollars. Oil, iron ore, grains, and much of global trade are invoiced in USD. As long as a barrel of crude is settled in dollars, every importing nation needs dollars in reserve — a structural demand that has nothing to do with affinity for the United States.
4. Institutional inertia and the network effect. A reserve currency is valuable because everyone uses it — and everyone uses it because it is accepted by everyone. Breaking that loop requires a massive shock or a clearly superior alternative. Neither is on the table in 2026.
What Is Eroding That Dominance
Recognizing those pillars does not mean ignoring the cracks. Yellen was candid that the dollar's share has shrunk — and much of that erosion has geopolitical, not economic, roots.
The sensitive point — sanctions as a weapon. Yellen attributed much of the reserve diversification to the freezing of Russian central-bank assets in 2022. When other governments watched a peer's reserves get confiscated, many began asking: "what if that's us one day?" The fear of financial weaponization pushed them toward assets no foreign power can freeze.
Three erosion forces follow from that logic:
- Gold. It is the one asset no government can block. That is why the ECB's data is striking: gold (27%) now exceeds U.S. Treasuries (22%) in the composition of central-bank reserves worldwide. This is not the dollar losing its crown — it is central banks buying insurance against sanctions risk.
- Digital yuan and BRICS+. China is pushing its own payment rails and digital currency, and the BRICS bloc discusses settling trade outside the dollar. But the numbers expose the scale of the challenge: the yuan accounts for roughly 1% of global reserves. Political will cannot conjure overnight the liquidity the dollar spent 80 years building.
- The stablecoin paradox. Here is the most counterintuitive twist of Yellen's remarks. Crypto might seem to threaten the dollar — but stablecoins, overwhelmingly dollar-pegged, do the opposite: they reinforce U.S. monetary hegemony. Every dollar-backed stablecoin requires dollars or Treasuries as collateral, generating new demand for the currency and extending the digital dollar to billions of people outside the traditional banking system. It is an anti-de-dollarization force hiding inside crypto innovation.
The correct reading, therefore, is slow diversification, not substitution. The dollar is losing relative share — but it remains without a credible rival, and several of the forces supposedly challenging it end up fueling demand for USD itself.
What Yellen Said at Expert XP 2026
At the São Paulo Expo from July 23 to 25, Yellen wove these threads into a sober assessment. She reaffirmed the dollar's irreplaceability but framed the moment with a phrase that captures the decade: "we are living through a continuous sequence of shocks" — pandemic, war, sanctions, supply-chain breakdown, and now a trade conflict.
On Trump's tariffs, she was precise: they reflect the president's "long-held personal views," not an evidence-based economic diagnosis. That distinction matters for investors because tariffs driven by conviction rather than data tend to be less predictable and longer-lasting — precisely the kind of noise that strengthens defensive assets and demand for dollars as a safe haven.
| Force | Direction | Effect on the Dollar |
|---|---|---|
| Treasury market depth | Supports | Structural anchor — no rival |
| Commodities priced in USD | Supports | Permanent structural demand |
| Sanctions / weaponization | Erodes | Pushes central banks toward gold and diversification |
| Gold in reserves | Erodes | Sanctions hedge (27% > 22% Treasuries) |
| Yuan / BRICS+ | Erodes (marginal) | Only ~1% of reserves — far from a rival |
| Dollar-backed stablecoins | Supports | Paradox: reinforces dollar hegemony |
What This Means for Investors
The practical takeaway is the most important part of this article. The case for holding dollars was never a bet that the dollar would be eternal — it was about owning protection against the risk of being 100% exposed to a volatile emerging-market currency, sensitive to local fiscal and interest-rate dynamics. Nothing in Yellen's remarks weakens that logic; if anything, it reinforces it.
Building dollar exposure in practice means holding assets denominated in USD. Several routes are available:
- Exchange-traded products on B3 (Brazil's stock exchange). IVVB11 tracks the S&P 500 in Brazilian reais (BRL), delivering equity upside and FX exposure in one instrument — no foreign account needed. For investors who want dollar exposure without equity volatility, global fixed-income ETFs (such as BNDX11) tilt more toward currency plus yield than toward stock-market risk.
- Brokerage account abroad. For larger portfolios, holding an account outside Brazil gives direct access to Treasuries, global ETFs, and physical dollars, at the cost of more compliance overhead (foreign-exchange reporting, tax filings).
- Currency funds and BDRs (Brazilian Depositary Receipts). Additional alternatives that carry FX exposure, each with its own fee structure and tax treatment under Brazilian law.
The risk that cannot be ignored — FX cuts both ways. The dollar is a long-run hedge, but it swings hard in the short term. If the Brazilian real appreciates, a dollar-denominated position loses value in BRL on paper. That is why dollar exposure is a structural, long-horizon allocation — not a timing trade. Trying to "catch the bottom" of the exchange rate typically ends in regret.
Our Thesis: Why We Stay Bullish on the Dollar
At Rico aos Poucos, the dollar holds 25% of our reference allocation as of May 2026, with an Optimistic sentiment — the largest single position in our basket, tied with Real Estate. Yellen's remarks validate three reasons we maintain that conviction:
- No substitute in sight. Treasury market depth and the dollar settlement network have no ready competitor. The yuan at ~1% of reserves confirms that "de-dollarization" is a narrative running faster than reality.
- A shock-driven regime favors the dollar. In every global episode of stress, capital flows into the dollar. A "continuous sequence of shocks," as Yellen framed it, is exactly the environment in which the world's reserve currency tends to appreciate.
- Hedge against Brazil-specific risk. Regardless of what happens in the U.S., Brazilian investors carry domestic fiscal and political risk. The dollar is the natural hedge — and the fact that even central banks globally are diversifying into gold and USD illustrates that this is a universal playbook, not a local quirk.
Our read. Yellen did not deny the erosion — she contextualized it. The dollar is slowly losing relative share, driven by fear of sanctions, not by a superior alternative. Until a market emerges with the depth of U.S. Treasuries, the dollar remains the system's anchor and the most efficient hedge for investors whose liabilities are in an emerging-market currency. That is why we keep 25% in the Dollar with an Optimistic stance: not a bet on eternal U.S. superiority, but an acknowledgment that in the absence of a rival — and in a world of serial shocks — the dollar remains the portfolio's safest harbor.
Sources
- Janet Yellen — Expert XP 2026, São Paulo Expo (July 23–25, 2026). Video coverage by InfoMoney: youtube.com/watch?v=rzeTH9zCDpo
- Central-bank reserve composition data cited in the speech (dollar, yuan, gold vs Treasuries shares), per European Central Bank (ECB) references.
