Andrew Hauser: On the safe-haven status of the US dollar
Panel participation by Mr Andrew Hauser, Deputy Governor of the Reserve Bank of Australia, at the 2026 US Monetary Policy Forum, New York City, 7 March 2026.
The views expressed in this speech are those of the speaker and not the view of the BIS.
The phrase 'safe haven' – or safe harbour in Old Norse – conjures up images of a peaceful idyll, far from the wilds of the open seas, furnishing comfort and replenishment for the weary sailor. But the reality can be rather different – as Captain Cook found when, heading home at the end of his famous voyage in 1770, he grounded his ship HMS Endeavour on the Great Barrier Reef (Slide 2). In mortal danger, the crew found a promising river estuary – known as Waalumbaal Birri by the local Guugu Yimidhirr people – in which to conduct repairs. But the winds were so fierce, and the water so crocodile-infested, that it took them another week to stagger far enough inland to beach their leaking boat on a mudbank.
Defining a safe haven asset can be equally challenging.
Market participants typically identify three main characteristics of such assets (Slide 3): security (minimal credit risk); an inverse correlation with the value of risky assets; and liquidity. Those characteristics are said to flow, in turn, from a raft of more fundamental drivers including: economic stability; strong institutions; open markets for goods, services and capital; and deep financial markets.
The relative weight placed on these considerations varies across time, and by investor mandate. But if anything could have been said to meet these tests in recent decades, it is surely the US dollar. Whether that status may now be under threat is a topic of lively discussion, in Australia and beyond. But what does the evidence show?