Currency Diversification Isn’t Enough — Here’s What Truly Protects Your Wealth

Many clients come to us with a common desire: to get some of their assets out of the US dollar.

This makes perfect sense. The dollar faces mounting pressures, and true wealth protection involves not putting all your eggs in one basket.

However, there’s a critical distinction many investors miss: the difference between currency diversification and jurisdictional diversification.

When clients want to diversify away from the US dollar, they often turn to US-based financial services that allow purchasing foreign currencies. While this does technically diversify their assets out of the dollar, it misses half the protection equation.

Here’s why: When you hold foreign currencies through US institutions, you’re still fully connected to the US banking system. Your assets remain exposed to US-specific risks, including:

• US banking system failures.
• Potential capital controls.
• Regulatory changes.
• Political instability.
• Legal vulnerabilities (lawsuits, creditors).

This is where jurisdictional diversification becomes essential.

Why Jurisdictional Diversification Matters More Than Ever

Throughout history, wealthy individuals and families have recognized the importance of not having all assets tied to a single country’s financial system. Today, this strategy is even more relevant for several compelling reasons:

1. Unprecedented Government Debt

The US national debt has surpassed $36 trillion and continues to climb at an alarming rate. This debt burden creates significant long-term pressure on the dollar and the entire US financial system. When a country’s debt becomes unsustainable, governments typically resort to one of several problematic solutions:

• Currency devaluation (explicit or through inflation).
• Higher taxation on wealth and assets.
• Capital controls to prevent wealth from leaving the system.
• Wealth taxes or other extraordinary measures.

Having assets positioned outside this system creates a critical safety valve.

2. Banking System Vulnerabilities

The banking crisis of 2023 reminded us that even well-established US banks can fail suddenly. When Silicon Valley Bank and First Republic Bank collapsed, they exposed weaknesses in the US banking system that many had overlooked. The FDIC’s insurance limits ($250,000 per depositor, per bank) offer inadequate protection for those with substantial assets.

Swiss banks, by contrast, are expected to increase capitalization levels and maintain conservative lending practices in 2025 to increase stability during financial turbulence.

3. Potential for Expanding Government Overreach

What if government agencies were to dramatically expand their reach into private financial matters? In such a scenario, asset seizures, account freezes, and regulatory restrictions could become more common across Western nations.

Having assets in jurisdictions with stronger property rights and privacy protections creates a critical buffer against overreach.

4. Digital Vulnerabilities

As banking becomes increasingly digital, new vulnerabilities emerge. System outages, cyber-attacks, and electronic fraud represent growing threats. Geographic diversification helps ensure you maintain access to assets even when systems fail in one jurisdiction.