US Treasury Secretary Janet Yellen Warns Sanctions Could Undermine US Dollar

Key Points:

• US Treasury Secretary Janet Yellen warns that sanctions on countries like Russia could undermine the dominance of the US dollar in international trade.
• BRICS nations, including Brazil, Russia, India, China, and South Africa, are pursuing the creation of an alternative currency to eliminate the greenback’s hegemony.

US Treasury Secretary Janet Yellen warns sanctions on countries like Russia could hurt the US dollar as BRICS nations pursue alternate currency trend.

BRICS nations (Brazil, Russia, India, China, and South Africa) have been pursuing an alternative currency to eliminate the dominance of the US dollar. The Treasury Secretary of the US, Janet Yellen, has spoken about the sanctions on countries like Russia, which could hurt the US dollar.

Yellen spoke to CNN to discuss those sanctions and the adverse effect they could have on the greenback’s international relevance. “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 stated in an interview.

Conversely, she noted that the US uses the dollar as a tool “judiciously” in the same interview. “It is a very effective tool. Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative,” Yellen remarked. In recent news, Brazil President Luiz Inacio Lula da Silva called for countries to develop their own currencies for international trade, decreasing reliance on the US dollar.

The BRICS nations have grown in importance globally, as observed in their recent collectives surpassing the G7 nations in GDP (PPP). The trend to create an alternative currency is not limited to BRICS nations, as other international trade partners have also been adamant about pursuing an alternative standard currency to the greenback.

While the US uses the dollar as a tool effectively, the increasing voice against the US dollar’s dominance is undeniable, creating a desire on the part of other countries to find an alternative. As the global economy evolves, it will be interesting to see how the role of the US dollar changes and how the world will adapt to new currencies.

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