FRANKFURT, Germany -- The euro has gained ground as a global currency used for government reserves as U.S. economic sanctions deter some countries' use of the dollar, the European Central Bank said in a report Thursday.
The euro's share of measurable foreign reserves held by central banks and governments around the world rose 1.2 points during 2018 to 20.7%, reversing a declining trend.
The dollar's share dropped slightly to 61.7%. That is down more than 7 percentage points from its peak level before the global financial crisis of 2007-2009.
"It's primarily diversification away from the dollar, which benefits the euro," ECB executive board member Benoit Coeure said.
The dollar, however, is still very much the dominant currency for international trade, borrowing and reserves, despite a slow diversification toward other currencies over recent years, most recently toward the Chinese yuan.
Factors affecting the dollar's use include countries selling dollars to support their own currency, and U.S. financial sanctions such as those against Russia, which has moved some holdings to other currencies to avoid U.S restrictions.
Another reason dollar reserves declined is believed to be sales of dollar assets by emerging-market countries that are trying to keep their national currencies from falling against the dollar.