United States Secretary of the Treasury Janet Yellen has recently agreed to the fact that American currency weaponization through sanctions could prove lethal for the US dollar. Yellen testified before the House of Financial Services Committee on Tuesday, adding her comments on US dollar sanctions proceedings. She voiced her concern about protecting the international status of the US dollar, accentuating the fact that several nations have expedited efforts to derail the US dollar due to the US’s ability to sanction other countries.
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Weaponization Of The US Dollar
Yellen on Tuesday addressed one of her major concerns regarding the US dollar. The American currency is slowly attracting new enemies as several nations are diversifying and opting for other currency alternatives. This development can significantly hamper the US dollar’s prestige, adding more pressure to the US economy.
Yellen shared that the US’s habit of sanctioning nations is one of the main contributors to the de-dollarization accelerators. Per sources, several experts have opined how the US sanction rampage is coercing nations to choose alternatives rather than being actively engaged with the US dollar.
VOA later reported that Yellen was quick to note the harsh repercussions of the US continuing to impose sanctions on nations. She reiterated that these nations will continue to opt for currency alternatives if the US pursues the idea of levying sanctions on nations.
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Experts Weigh In On De-Dollarization
A report from Global Times shares how de-dollarization is not just a passing phase, but is now becoming a stark reality. The US’s consistent spree of sanctioning nations is compelling them to look for local currency narratives to settle trade outputs. According to Zhao Qingming, a Beijing-based veteran financial expert, the aforementioned practice is capable of significantly weakening the US dollar.
“This will have a certain impact on the international status of the US dollar. In the short term, the position of the US dollar should remain stable, but over time, its position may weaken,” Zhao said
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With the BRICS alliance gaining momentum, the efforts to derail the US dollar have already started to take shape. China and Russia are now opting for local currency transactions instead of using the US dollar to trade internationally. Similarly, the ASEAN network, which is a prominent ten-bloc network is also preparing its currency system to rival the US dollar’s prestige and repute.