The American Currency’s power is at risk as China, Russia, and Iran plan to dump the dollar
Written by Hawraa Ktab
Treasury Secretary Janet Yellen says that one of the three most significant players in global marketing is planning to decrease the use of the US dollar. In the new recent interview, Yellen explained that China, Russia, and Iran are thinking of ways to move away from the dollar after seeing how the United States took advantage of the world’s currency for financial punishment. Yellen says while the weaponization of the US dollar is an extremely powerful tool for preventing lousy behavior on the world stage, it may have unforeseen results of countries coming together to avoid punishment. “So there is a risk when we use financial sanctions that are linked to the role of the dollar, that over time it could undermine the hegemony of the dollars but this is an extremely important tool we try to use judiciously and in circumstances, especially when we have the support of our allies. It’s not just the United States. It’s a coalition of partners acting together to impose these sanctions. So it is a very effective tool. Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative.”
Last year, Russia agreed to sell oil to China in exchange for yuan. China reached an agreement in March that brought contact between Iran and Saudi Arabia, two of the world's top oil producers. While Yellen admits that some nations' actions could harm the US dollar's place as the currency of the world, she shows that they are going to be to find different money that provides the exact same fundamental benefits. “The dollar is used as a global currency for reasons that are not easy for other countries to find an alternative with the same properties. The US Treasury market is the deepest, most liquid, and safest asset. Dollars are widely used.
We have very deep capital markets and rule of law that are essential in a currency that is going to be used globally for transactions, and we haven’t seen any other country that has these basic infrastructure and institutional infrastructure that would enable its currency to serve a world like this.”