The Simulation Desk

Simulation Desk: Reserve fragmentation — erosion of the dollar's exorbitant privilege

Agent-based stress test of 'Reserve fragmentation — erosion of the dollar's exorbitant privilege' — 5 blind-spot probes for the desk. 0pp, calibration-gated.

The Simulation Desk · agent-based scenario simulation · 2026-06-23

We stress-tested one scenario from the desk’s register with an ensemble of interacting simulated actors — institutions, intermediaries, policymakers and traders — and let them argue, trade and react over 22 rounds. What follows is what the simulation surfaced for the desk to investigate. It is calibration-gated: it carries 0 percentage points on every published probability (cap 5pp, Day 18). Probes, not predictions.

Scenario under test: Reserve fragmentation — erosion of the dollar's exorbitant privilege

Desk thesis: At the margin, reserve managers are diversifying away from the dollar — slowly raising the real funding cost of deficit sovereigns.

Desk probability at run time: 31% — see the scenario register for the current number and model card.

What the simulation surfaced — probes for the desk

  1. The weakening of dollar privilege and the market response
  2. Rising market volatility
  3. A shift in hedging strategy
  4. A shift in investment philosophy
  5. A changing regulatory environment

From the simulation record

> As the dollar's privilege weakens, long-term capital owners face higher risk and a recalibration of investment strategy.
The weakening of the dollar's privilege has triggered multiple market reactions, and long-term capital owners face unprecedented challenges and opportunities.

What this is — and is not

These are research prompts surfaced by a simulation, not facts and not published probabilities. Anything that survives the desk’s source-gated investigation shows up in the scenario’s model card with named sources; the rest is discarded.

Interrogate this scenario in the Scenario Lab → · Command Center · The Odds Board · How the simulation leg is governed

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