Eurasia Press & News
The role of the U.S. dollar as the world reserve currency may actually diminish due to the U.S. using its leverage on the global financial system to pursue its geopolitical goals through sanctions, Secretary of the Treasury Janet Yellen has admitted. However, no other currency is ready to replace it, she reckoned.
Yellen was asked during an interview on Sunday by CNN’s Fareed Zakaria about the efficiency of the anti-Russia sanctions and about Washington’s history of what he described as the “weaponization of the dollar.”
Zakaria cited recent statements by Brazil’s President Lula da Silva and other politicians about the risk of dependency on the U.S. currency. He asked whether the present time would be remembered as the moment when “the dollar’s 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.
Regardless, she added, the role of the U.S. greenback is explained by factors such as the volume of the U.S. treasuries market, its wide use in international trade, and a “rule of law” in the U.S. that other nations cannot offer.
“We have not seem 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 U.S. domination in global finances are not necessarily advocating replacing the dollar with another currency serving the same role. Russia’s leadership has prioritized a transition away from the U.S. dollar and into regional currencies.
An absence of a single global reserve currency would be a natural element of multipolarity, supporters of such a model say. The West’s 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.
“It is 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 Russia-Brazil trade. “Nobody knows who the U.S. 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.”
U.S.-China Split May Weaken Growth And Fuel Inflation, Says Lagarde
An AP report said:
The fragmentation of the world economy into rival blocs led by the U.S. and China threatens to destabilize global commerce, increase inflation and weaken growth, Christine Lagarde, the president of the European Central Bank, warned Monday.
Speaking to the Council on Foreign Relations in New York, Lagarde said that economic data dating to 1900 shows that “geopolitical risks led invariably to higher inflation.”
Costs tend to mount, she said, as countries stop or reduce trading with rivals and seek supplies at home or from allied countries. She added that it can be difficult to sever ties: Europe, for example, relies on China for 98% of its rare earth minerals, which are used in cellphones and computer hard drives, among other products.
If world supply chains were to split along geopolitical lines, Lagarde warned, consumer prices could rise 5% in the near term and 1% in the long run.
Lagarde also said the U.S. could not take for granted the U.S. dollar’s continued role as the go-to currency for world trade, though for now it remains unchallenged. China, Russia and other countries are seeking to wean themselves off dependence on the U.S., which has sought to use its dominance to impose sanctions, most notably on Russia after its invasion of Ukraine last year.
A more splintered and less efficient world economy, Lagarde said, will make it harder for central banks to contain inflation. They will need help from government policymakers, who must find ways to control costs by improving the efficiency of supply chains and by conserving energy.
Lagarde, who began leading the ECB in 2019 after eight years as head of the International Monetary Fund, held out hope that this goal can be accomplished. She pointed to the challenge Europe had faced after Moscow cut off natural gas supplies after it invaded Europe.
Aided by an unusually warm winter, Europe succeeded in saving energy, finding alternative energy supplies and opening liquefied natural gas terminals that permitted access to sea-bound imports from the U.S. and other countries much faster than expected.
To combat inflation exacerbated by the Ukraine war’s disruption of energy and food markets, the E CB has aggressively raised interest rates.
“It is beginning to work,’’ Lagarde said.
She credited an easing of supply chain backlogs and lower energy prices, along with the ECB’s tighter monetary policy.
Inflation in the 20 countries that share the euro currency slowed in March to 6.9%, the lowest level in a year, down from a peak of 10.6% in October.
U.S. Economy Crashing, Says Trump
Another media report said:
America and its economy are facing major challenges that could undermine Washington’s position in the world, former US President Donald Trump told a National Rifle Association (NRA) convention in the state of Indiana last week.
The Biden administration has pushed the country to the brink of collapse with both its foreign and domestic policies, Trump claimed as he spoke about his ambitions for the 2024 presidential campaign.
“The USA is a mess. Our economy is crashing, inflation is out of control,” the former president stated. The U.S. dollar is “crashing” as well, he claimed, adding that the U.S. currency “will soon no longer be the world’s standard.” This would amount to Washington’s “greatest defeat in 200 years” and was “unthinkable just a few years ago,” Trump said as he addressed the NRA convention in Indianapolis last Friday.
The Biden administration’s failures in the foreign policy field have seen Russia join forces with China, the former president said, adding that, together with Iran and North Korea, Moscow and Beijing have now formed a “menacing and destructive coalition.”
“We have never been in such danger in our lives. I believe it is the most dangerous time in the history of our country,” he said, noting that the Biden administration had been unable to avoid an escalation between Washington and Moscow, and the use of nuclear weapons is now being mentioned, including by Russian President Vladimir Putin.
According to Trump, the current administration has done more “damage” to the U.S. than the “five worst” presidents in the country’s history, although he did not identify the former leaders to whom he was referring.
Trump said: “We are a failing nation.”
Trump, who has confirmed his intention to seek the Republican nomination for the 2024 presidential election, vowed to “make America great again” if elected. He remains mired in several legal issues, however, including a criminal case relating to campaign finances.
During his speech on Friday, Trump repeatedly described this prosecution as election interference instigated by the Democrats, and maintains that his legal issues will not derail his bid to return to the White House.
