• U.S. Treasury Secretary Janet Yellen acknowledged the potential risks of weaponizing the U.S. dollar through sanctions to the currency’s hegemony in international markets.
• Sanctioned countries are looking for alternatives to the U.S. dollar and developing strategies that allow them to conduct trade away from it, such as using Chinese yuan with specially designated banks as clearing entities.
• Brazilian President Luiz Inacio ‘Lula’ da Silva has called for developing nations to abandon the U.S. dollar and establish a new currency among BRICS nations.
U.S Treasury Secretary Acknowledges Risks of Dollar Weaponization
U.S Treasury Secretary Janet Yellen has addressed the risks associated with weaponizing the American Dollar through sanctions and its effect on international markets‘ trust in the currency’s hegemony . She stated that while this is an important tool, it should be used “judiciously” in order to avoid any negative repercussions that could arise from its misuse or overuse..
Sanctioned Countries Seek Alternatives To The US Dollar
In response to sanctions placed upon them, countries like China, Russia, and Iran are seeking alternatives to conducting trades using the US Dollar – even if they are affected by those sanctions – by utilizing methods such as trading using Chinese Yuan and facilitating payments via specially-designed banks acting as clearing entities . This would allow them to bypass any restrictions imposed on their access to international markets due to these sanctions without having to resort exclusively to non-conventional means of payment like cryptocurrencies or barter-based exchanges .
BRICS Nations Move Towards Establishing New Currency
In his visit to China, Brazilian President Luiz Inacio ‘Lula’ da Silva proposed that BRICS countries move towards establishing a new currency instead of relying solely on the US Dollar . This was echoed by a report published by Bank of Russia which concluded that substituting for the US Dollar is going be difficult given its current structure in foreign trade .
Challenges To Establishing A New Currency
Any attempt at creating an alternative world currency runs into several challenges , ranging from issues related technological infrastructure needed for its adoption , stability issues related with monetary policy ,and lack of liquidity when compared with existing currencies such as USD (or Euro). These obstacles can only be overcome if all BRICS nations come together and create economic policies aimed at supporting each other’s economies .
The current geopolitical climate shows growing discontent for US-led economic policies around world and calls for alternative solutions have been increasing across multiple fronts . However , it remains unclear whether alternative currencies will gain enough traction amongst global traders or whether other solutions might emerge in order replace traditional financial instruments such as USD or Euro .