Treasury Secretary Janet Yellen warns of potential risk to US dollar supremacy as China, Russia, and Iran look for alternatives to circumvent financial sanctions.
In a recent interview with CCN, Yellen noted that the use of the US dollar as a tool for imposing financial sanctions could undermine its global hegemony over time.
However, she highlighted that the US dollar’s fundamental properties, such as its use as a global currency and the safety of the US Treasury market, make it difficult for other nations to find a suitable alternative.
Yellen also pointed out that the United States does not use financial sanctions unilaterally, but as part of a coalition of partners acting together.
She acknowledged the effectiveness of the tool but stressed the importance of using it judiciously and with the support of allies.
China, Russia, and Iran have taken steps to reduce their reliance on the US dollar, such as agreeing to trade oil in yuan and restoring diplomatic ties between Iran and Saudi Arabia, two of the world’s largest oil producers.
While Yellen acknowledges that the actions of some nations could threaten the US dollar’s status as the world’s reserve currency, she believes that they will be hard-pressed to find an alternative with the same fundamental properties.
The Treasury Secretary’s comments reflect the ongoing concern among US policymakers about the potential erosion of the US dollar’s global dominance.
The dollar has been the world’s reserve currency for decades, but the rise of China and other economic powers has led to speculation that the dollar’s reign may be coming to an end.