Janet Yellen Believes Sanctions Could Make the US Dollar Lose its Hegemony
On April 16, 2023, Treasury Secretary Janet Yellen declared that the economic sanctions the United States has imposed on Russia could place the dollar’s hegemony at risk. She believes that sanctioned nations could seek out alternative currencies as a form of economic relief.
“There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar,” Yellen said during an interview with CNN.
“Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative,” she said to CNN’s Fareed Zakaria during an interview. “But the dollar is used as a global currency for reasons that are not easy for other countries to find an alternative with the same properties.”
The US capital markets’ robust nature and the country’s respect for the rule of law “are essential in a currency that is going to be used globally for transactions,” she added. “And we haven’t seen any other country that has the basic… institutional infrastructure that would enable its currency to serve the world like this.”
Yellen called attention to how the sanctions are an “extremely important tool,” when implemented by the US and its allies as “a coalition of partners acting together to impose these sanctions.”
When asked about the potential use of frozen Russian assets to reconstruct a war-torn Ukraine after the launch of Russia’s military incursion into it, Yellen remarked that “Russia should pay for the damages that it’s caused.”
Though she highlighted that there are “legal constraints on what we can do with frozen Russian assets, and we’re discussing with our partners what might lie in the future.”
The sanctions policy the Collective West has pursued is clearly beginning to blow up in its face. All interventions eventually come with a cost. At some point, equilibrium must emerge. In this case, it will come in the form of multipolarity creating the conditions to build parallel economic and defense networks. Such networks, should they continue growing in size, could supplant the US and render it a declining power.
This scenario could become a reality if American policymakers continue with their delusional unipolar moment mindset of intervening everywhere across the globe.