The whole “de-dollarization” narrative is a topic that has garnered widespread discussions. While the BRICS nations have been working towards reducing U.S. Dollar dependence, former members of the American government believed that their own country might be making the scenario worse. Hilary Clinton, the former U.S. Secretary of State, explained how the nation defaulting on its own debt obligations could instigate the downfall of the dollar.
In a recent opinion piece published by the New York Times, Hillary Clinton, a former first lady cautioned about the terrible consequences that could come from the U.S. defaulting on its debt obligations. This includes the possibility that the dollar’s role as the world’s reserve currency would be at stake. Elaborating on the same, Clinton wrote,
“The debt ceiling debate is not about authorizing new spending. It’s about Congress paying debts it has already incurred. Refusing to pay would be like skipping out on your mortgage, except with global consequences.”
The dollar undoubtedly has immense power. Therefore, Clinton believed that defaulting on debts could give rise to a “worldwide financial meltdown.”
Clinton goes on to explain how important the dollar is for global trade between individuals, businesses, and governments. She claimed that they do so “because they trust that America pays its debts, upholds the rule of law, and guarantees stability.” This has further aided the U.S. to apply sanctions, such as those against Iran and Russia. She also stated that they invested in U.S. Treasury bonds and depended on U.S. institutions for the above-mentioned reason.
Clinton expresses concerns over China & Russia taking advantage
The former first lady seems to be worried about China’s Xi Jinping and Russia’s Vladimir Putin. She believed that,
“By undermining America’s credibility and the pre-eminence of the dollar, the fight over the debt ceiling plays right into the hands of Xi Jinping of China and Vladimir Putin of Russia.”
Considering the sanctions on Russia and the BRICS’ de-dollarization initiative, Clinton suggested that Putin and Jinping would be eager to slash the dollar dominance. The former secretary of state also highlighted the possibility of other nations joining this movement. She added,
“If Congress keeps flirting with default, calls for dethroning the dollar as the world’s reserve currency will grow much louder — and not just in Beijing and Moscow. Countries all over the world will start hedging their bets.”