Israel's central bank added yuan to its reserve holdings for the first time ever.
Previously, the bank only held US dollars, euros, and the British pound.
According to the IMF, the dollar's share of the total global currency reserves has fallen to its lowest point in over two decades.
Israel's central bank will add Chinese yuan while slashing its dollar and euro holdings in a move to diversify its reserve allocations and lengthen its investment horizon, Bloomberg reported.
"We need to look at the need to earn a return on the reserves that will cover the costs of the liability," Deputy Governor of the Bank of Israel, Andrew Abir, said in an interview.
In addition to the yuan, the bank will also add the Canadian and Australian dollars, signaling a shift in the bank's "whole investment guidelines and philosophy," Abir said. Previously, the bank only held US dollars, euros, and the British pound.
Israel's reserves stockpile will surpass $200 billion for the first time.
Moving forward, the yuan will take up 2% of the bank's reserves, and both the Canadian and Australian currencies will have 3.5% each, according to the bank's annual report.
The new additions means the euro's share will fall from 30% to 20%, and the dollar will account for 61%, down from 66.5%.
According to the International Monetary Fund, the dollar's share of total global currency reserves has fallen to its lowest point in over two decades, sparking speculation over the rise of China's yuan.
China has long pushed for the yuan to supplant the dollar as the go-to reserve currency. The weaponization of the US currency against Russia's financial institutions means a sea change could be coming, experts say. The effectiveness of the West's sanctions against Russia has provided a wake-up call for countries seeking to reduce their exposure to the dollar, economist Aleksandar Tomic previously told Insider.
But for China's yuan to gain much further, other nations would have to lose trust in the US economy and gain trust in China's monetary authorities.
"Challenges to the dollar have come before, but none have taken hold because when things turn volatile, the US tends to be stable, so the dollar persists," Tomic said.
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