On October 25, the CFA Institute, consisting of global investment professionals, released a new global survey report expressing significant concerns regarding the sustainability of U.S. finances and the reliance on budget deficits.
The report, titled “Dollar Privilege: CFA Institute’s Global Survey on U.S. Debt and the Role of the Dollar,” gathered insights from over 4,000 investment professionals worldwide, with more than half of the respondents based in the United States.
Among those surveyed, nearly 80% expressed serious concerns about the sustainability of U.S. finances and the deficit reliance. Additionally, nearly two-thirds believe that the dollar will lose its status as the world’s reserve currency within the next 5 to 15 years. Respondents from developed markets were particularly pessimistic, with 79% indicating that U.S. fiscal sustainability is unsustainable, compared to 65% among emerging market respondents.
Participants identified that the dollar’s position as the primary global reserve currency is most likely to be replaced by a multipolar currency system (38%), followed by digital currencies (12%) and hard currencies, such as gold (12%).
Olivier Fines, the CFA Institute’s Director of Industry Advocacy for Europe, Africa, and the Middle East, emphasized that the findings highlight a strong concern over the lack of fiscal discipline in the world’s largest economy. He warned that if the dollar loses its reserve currency status, the U.S. could face a multitude of challenges, including higher borrowing costs, difficulties in financing government deficits, and reduced foreign investment in the U.S. economy.
The survey indicated that a majority of respondents (61%) believe the U.S. cannot bring its debt-to-GDP ratio down to a sustainable level nor effectively control deficit spending through other means. To alleviate the current record-level debt burden, 69% of respondents suggested that the U.S. government should cut discretionary spending (such as defense), while 52% recommended reducing mandatory expenditures, like Social Security and healthcare costs.
Paul Andrews, Managing Director of Industry Research and Standards at the CFA Institute, stated that the dollar’s status as the reserve currency provides unique advantages to the U.S., but it also comes with responsibilities that require the careful maintenance of global economic resilience and market trust.
