Bloomberg reported that Israel added four new currencies – among them the Chinese Yuan (RMB) – to its central bank holdings in an unprecedented move in the country’s history. Additionally, Israel’s Central Bank will cut US Dollar (USD) and EUR holdings to diversify its foreign reserves.

Israel’s foreign currency reserves, which surpassed $200 billion last year for the first time, were traditionally comprised of US dollars, Euros, and British Pounds. Israel will now consist of Canadian dollars (CAD) and Australian dollars (AUD) in their foreign currency holdings. It will also include the Japanese Yen and the Chinese Renminbi.

Deputy Governor Andrew Abir called the decision a change in Israel’s “whole investment guidelines and philosophy.” He explained that the increase in Jerusalem’s foreign exchange reserves compelled the Central Bank to mull “the need to earn a return on the reserves that will cover liability costs.”

The Central Bank, which held 67.4% of its foreign exchange in USD, 30.1% in Euros, and 2.5% in British Pounds in 2020, now intends on having the British Pound and Japanese Yen each comprise 5%. The Chinese Yuan will comprise 2% of its holdings, while Australian and Canadian currencies will account for 3.5% each.

A decrease in US dollars and EUR holdings will take place to enable the new reserves. USD holdings will go from 66.5% in 2021 to 61% – a roughly 8.3% reduction – while Israel’s Euro holdings will be reduced from 30.8% to 20% – a staggering 35% decline in investment.

China pushed for a more significant role in the foreign exchange space for their currency, the Chinese Yuan Renminbi – without much success. IMF data reveals that the RMB’s share of global currency reserves increased to an unprecedented 2.79% by 2021 – though attempts to expand RMB holdings were criticized by Bei Jing’s tight regulation, limits on an exchange, and accusations of currency manipulation.

Amid a bevy of sanctions against Russia to cripple their economy for attacking Ukraine, several countries have become cautious of the risks involved with a USD-based global economy in what is being coined “de-dollarization” – possibly paving a path for the Yuan to increase in international prominence.