Default fears put dollar's reserve status at risk

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$100 dollar bill on top of USD money pile.

Anxiety over a potential U.S. debt default has led some analysts to question whether the greenback's days as a global reserve currency are numbered.

The U.S. government looked set to move into its 14th day of a shutdown on Monday, ramping up fears that the October 17 debt ceiling deadline could be missed prompting the world's largest economy to default on its debt obligations.

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Richard Yetsenga, head of global markets research at ANZ, told CNBC Asia's Squawk Box that the recent political wrangling in Washington was hurting his already wavering faith in the greenback.

"I think that what's going on in U.S. politics, the way decisions are being made from a very fundamentalist, philosophical view point rather than a practical, solution-based viewpoint, says that the dollar is not the robust entity it was 10-15 years ago," he said.

Yetsenga acknowledged weaknesses with alternatives to the dollar, but said he did envisage the world moving towards a range of global reserve currencies, rather than there just being the dollar.

"Certainly the dollar as the sole reserve currency... that period is heading further and further away," he said.

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Further compounding this view, European Central Bank policy maker Ewald Nowotny warned over the weekend that the dollar's role as a leading reserve currency is at risk as a direct result of the political impasse in the U.S.

He told Austrian broadcaster ORF that he was concerned about the negative impact the shutdown might have on the dollar's long-term role.

Talk about the dollar's diminishing role as reserve currency has been prevalent in recent years. Analysts have pointed to other global currencies like the Swiss franc, the Japanese yen and the Chinese renminbi as potential contenders for the role.

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In the second quarter of this year, the amount of foreign exchange reserves held in U.S. dollars totaled $11.1 million, while the amount in Swiss francs was $15,912 and in yen, $233,630 by contrast.

But Paul Bloxham, chief economist for Australia and New Zealand at HSBC, told CNBC on Monday that recent events had shown that there is no real alternative to the dollar as a global reserve currency.

"The U.S. is still the deepest most liquid market in the world and though we would very much like to have an alternative, certainly in events like this, there really isn't one," said Bloxham.

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The Chinese government has long been pushing for the renminbi to become a global reserve currency, but it remains tightly controlled and is yet to be made fully convertible.

However, a number of currency swap deals over the past year, including one with the euro zone last week, have boosted hopes that Chinese authorities are taking steps in the right direction.

Bloxham said he did see the renminbi eventually becoming a bigger part of global currency markets, but said in his view, this remained a long way off.

(Read More: Yuan now one of world's most tradable currencies)

"They are rapidly opening up the renminbi market. That's going to be a bigger deal. But I don't think we are there yet, we are a few years off before we are at a point when markets are going to trade that way [using the renminbi as a reserve currency]," he added.

Jeffrey Haling, senior manager at FX Trading at Saxo capital Management, also said he doubted the renminbi would be able to rival the dollar while it continued to be tightly controlled and not fully convertible.

"If you're going to put the renminbi in your reserves you might as well put U.S. dollars in your reserves, because it's effectively still pegged. And even if [Chinese authorities] widen the band out to 2 percent it's still a pegged currency," he said.

— By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie