sanctions against Russia risk undermining the role of the dollar as the world’s global reserve currency.Īnd in a Fox News interview, right-wing Republican Senator Marco Rubio lamented that, within five years, the United States may no longer be able to use the dollar to bully other countries because “there will be so many countries transacting in currencies other than the dollar that we won’t have the ability to sanction them.”
Treasury Secretary Janet Yellen warned that U.S. Since no other country has the benefit of the “ecosystem” that has developed around the dollar over the past century, diversification is a slow process, but the war in Ukraine has helped speed the transition. Many countries have already been gradually diversifying their foreign currency reserves, from 70% globally held in dollars in 1999 to 65% in 2016 to only 58% by 2022. sanctions against dozens of countries around the world have raised fears that holding large dollar reserves leaves countries vulnerable to U.S. But China, Russia, India, Brazil, Saudi Arabia and other nations are taking steps to conduct more trade in their own currencies, or in Chinese yuan. dollar was the undisputed king of global currencies. Here are several developments worth watching:įor decades, the U.S. Despite the recent tragedy of Russia’s invasion of Ukraine and the agony of yet another endless war, the tectonic plates of history are shifting into new alignments that offer hope for the future of humanity. leaders have been losing wars and trying to cling to international power, a new multipolar world has been emerging. But once a great power’s economic prowess is waning, the use of military force to try to prolong its day in the sun leads only to unwinnable conflicts, as European colonial powers quickly learned after the Second World War, and as Americans are learning today.
Rising economic powers develop military power to consolidate and protect their expanding economic interests. Kennedy observed that military power follows economic power. But the United States has indeed failed to “adjust sensibly to the newer world order,” using military force and coercion in flagrant violation of the UN Charter in a failed quest for longer lasting global hegemony. Since Kennedy wrote those words, we have seen the end of the Cold War, the peaceful emergence of China as a leading world power, and the rise of a formidable Global South. ( Code Pink) – In his 1987 book The Rise and Fall of the Great Powers, historian Paul Kennedy reassured Americans that the decline the United States was facing after a century of international dominance was “relative and not absolute, and is therefore perfectly natural and that the only serious threat to the real interests of the United States can come from a failure to adjust sensibly to the newer world order.”
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