Sanctions may backfire on dollar, US Treasury secretary admits (

Sanctions may backfire on dollar, US Treasury secretary admits

He asked whether the present time would be remembered as the moment when the dollars hegemony and its status as a reserve currency began to falter.

Yellen acknowledged that use of financial sanctions could undermine the hegemony of the dollar in the long run, but promised that Washington was using this important tool judiciously and with the backing of its allies.

Read more Brazil calls for ‘move away’ from dollar

Regardless, she added, the role of the American greenback is explained by factors such as the volume of the US treasuries market, its wide use in international trade, and a rule of law in the US that other nations cannot offer.

We havent seen any other country that has this basic infrastructure and institutional infrastructure that would enable its currency to serve the world like this, she explained.

Opponents of US domination in global finances are not necessarily advocating replacing the dollar with another currency serving the same role.

The Wests use of unprecedented sanctions against Russia, including bans on trade, seizure of national reserves and denial of financial services to Russian companies, has merely sped up the transition, in their view.

Its not a coincidence that the talk about a switch to national currencies got spurred now, Russian Foreign Minister Sergey Lavrov remarked in February during a discussion on RussiaBrazil trade. Nobody knows who the US president could find unappealing after getting up on the wrong side of the bed.

Yellen also mentioned the issue of frozen Russian assets in her interview with CNN, arguing that Russia should pay for the damage that it has done to Ukraine.

However, no other currency is ready to replace it, she reckoned.

Yellen was asked during an interview on Sunday by CNNs Fareed Zakaria about the efficiency of the antiRussia sanctions and about Washingtons history of what he described as the weaponization of the dollar.

Zakaria cited recent statements by Brazils President Lula da Silva and other politicians about the risk of dependency on the US currency.

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