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Sanctions could backfire on the dollar, US Treasury secretary admits

What kind of reaction was Janet Yellen called for by CNN? Weaponization? of dollars could be triggered globally

The US dollar’s role as a global reserve currency may actually decline as the US influences the global financial system to pursue geopolitical goals through sanctions, says Janet Yellen Finance the secretary approves. However, she thought that no other currency was ready to replace it.

Yellen was asked in an interview on Sunday with CNN’s Farid Zakaria about the effectiveness of anti-Russian sanctions and Washington’s history of what he called the “weaponization of the dollar.”

Zakaria cited recent statements by Brazilian President Lula da Silva and other politicians about the risks of dependence on the US currency. He asked if the present will be remembered as the moment when “the dollar’s hegemony and status as a reserve currency began to falter.”

Yellen acknowledged that the use of financial sanctions “could undermine dollar hegemony” in the long run, but Washington is using this “important tool” wisely and with the support of its allies. I promised that I would.

Nonetheless, she adds, the US dollar’s role is explained by factors such as the volume of the US Treasury market, its wide use in international trade, and the US “rule of law” that other countries cannot provide. rice field.

“I have never seen another country with the basic and institutional infrastructure that allows its currency to serve the world in this way,” she explained.

Opponents of US dominance in global finance are not necessarily advocating replacing the dollar with another currency that has the same role. Russian leadership is prioritizing the transition from dollars to community currencies.

The absence of a single global reserve currency would be a natural component of multipolarization, proponents of such a model say. They believe that unprecedented sanctions against Russia by the West, including the United States, have only accelerated the transition.

Russian Foreign Minister Sergei Lavrov said in February, during discussions on trade between Russia and Brazil, that “it is no coincidence that talk of switching to the national currency has now been spurred.” “Nobody knows who the president of the United States will find unattractive after getting up on the other side of the bed.”

Yellen also addressed the issue of frozen Russian assets in an interview with CNN. claiming “Russia should compensate for the damage it has done to Ukraine.”

( Sanctions could backfire on the dollar, US Treasury secretary admits

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