Is it failing? What metric do you use to evaluate that?
Is some currency replacing usd as reserves?
Discussion
It is a matter of fact that in recent years, many major world economies have stopped reinvesting their current account surpluses precisely in US government bonds and are rather starting to buy physical gold to a greater extent. China, for instance. The demand for US government bonds is therefore very likely to be significantly weaker now than it was 10 or 20 years ago, which can also be seen in the fact that the share of dollar foreign exchange reserves from an overall global perspective has been steadily declining in recent years. At the same time, it is one of the manifestations of the so-called dedollarization. Another manifestation of dedollarization is observed within the international payment system in international trade, primarily in developing economies that are gradually switching from the dollar to local regional currencies, especially the Chinese yuan.
What economies have switched to yuan? They don't have open capital markets, so that would be quite stupid. Many failing economies have in turn switched to usd (dollarization). Zimbabwe, Venezuela for example. Argentina is de facto dollarized.
Here are official reserves. The proportion of usd is not going down much. These include claims in different currencies. Renmibi is definitely not going up, the total amount of reserves is going down as an absolute number.
https://data.imf.org/?sk=e6a5f467-c14b-4aa8-9f6d-5a09ec4e62a4
Here's devaluation of currencies against usd. If you want foreign reserves, would you hold renmibi or usd?
I am not a super fan of usd (Bitcoin and gold for the win), but let's be realistic. What are real alternatives for central banks? Especially usable on international markets as collateral.
https://nostrcheck.me/media/public/nostrcheck.me_9485108349053656351687201357.webp
"Weakening" would be perhaps a more suitable word to describe it. It is for sure not a *failed* reserve currency at this point.
I don't think it is weakening in any practical sense of the word, although objectively that should be the case.
When sanctions against Russia well implemented and Russian central bank assets are frozen, it should have been a red flag for all the other central banks. Or a wakeup call.
But that's still not enough to cause a practical weakening. Most currencies are actually worse and usually much worse. One eyed is the king among the blind.
What you see is not weakening, but PR stunts. Some country takes a loan denominated in yuan, but it's for something that is delivered by Chinese companies anyway. Some deal is settled in gold. But using local currencies for trade is different than reserve status. When you look at the actual numbers of reserve composition, what is weakening is euro. Yuan will not be a reserve currency unless the Chinese gov opens the trading of capital markets, which would definitely show that emperor is naked, so they won't do it.