For US Treasury secretary, economic restrictions awaken the “desire” in countries to seek other currencies
US Treasury Secretary Janet Yellen told the US broadcaster CNN this Sunday (April 16, 2023) that the sanctions imposed by the country, mainly the export controls on Russia, pose a risk to the hegemony of the dollar as the main international currency.
There are risks for her. “very serious” by establishing financial sanctions that are pegged to the dollar. “Over time, the action could undermine the hegemony of the US currency, but this is a tool we seek to use judiciously when we have the support of our allies”he stated.
Yellen said she recognizes that countries affected by the measures are looking for other options to the dollar, however, she denied having currently identified another nation with “institutional infrastructure equivalent to the US to internationalize its own currency”.
According to the secretary, the economic sanction using currency is a tool “very effective” what creates a “desire” by countries like China, Russia and Iran to seek other alternatives for global trade.
“But the dollar is used globally, because it is not easy to find another alternative with the same properties as the dollar”, he said.
In Yellen’s assessment, the US Treasury is the most active, safe and liquid, reinforcing the idea that the US financial market is solid and provides legal security to investors. He further stated that the items are “fundamentals” for the development of another international transaction currency.
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