London-Sana
By exploiting the hegemony of the US dollar most used in trade and financial transactions and central bank reserves and openly turning it into a weapon against Russia, the United States risks provoking a backlash that could undermine the US currency and plunge the global financial system into competing blocs.
And the newspaper stated in an article entitled “The financial war .. Will there be a violent reaction to the dollar” .. that while Western countries have formed an “alliance against Russia”, there is certainly no global alliance of this kind, which may have important repercussions on the future of financing world, while countries around the world are studying how to deal with the dramatic step taken by Washington and its Western allies to freeze Russia's foreign reserves.
“The sanctions were horrific,” admits John Schmidt, who was the chief sanctions officer at the US Treasury. “They broke the mold,” Zoltan Bozgar, an analyst at Swiss-based global investment bank Credit Suisse, says. It acts as an aid in the birth of new monetary systems.”
The newspaper pointed out that China in particular has long-term plans to strengthen its national currency to play a much larger role in the international financial system, as Zhang Yanling, former executive vice president of the Bank of China, said in a speech last week that sanctions will discredit the United States and undermine the dominance of the dollar in the long run. She suggested that China help the world "get rid of the dollar's dominance sooner rather than later."
The newspaper pointed out that the death of the dollar has been predicted on many occasions and that if there is a steady international move away from the dollar in the coming years, the US sanctions that it imposed on the Russian Central Bank may not be a bold and new way to put pressure on the opponent, but rather it is the beginning of the dollar’s decline and decline. his dominance.
Mitu Gulati, a professor of financial law at the University of Virginia, warned that targeting a country the size of Russia is unprecedented. “If you change the laws of Russia, you change the laws of the entire world. Once you change these rules, international finance changes forever,” he said.
Some fear that the war will be the beginning of a profound transformation in the global economy. Larry Fink, CEO of BlackRock, the world's largest investment group, says in his annual letter to shareholders that the Russian military operation in Ukraine "put an end to the globalization we have witnessed during the past three decades." One result may be the increased use of cryptocurrencies, an area in which the Chinese authorities have made significant preparations.”
The Financial Times noted that the International Monetary Fund itself believed that the dollar’s dominance could be eroded by the “fragmentation” of the financial system. “We are already seeing this with some countries renegotiating the currency in which they are getting paid for trade,” says Gita Gopinath, the fund's first deputy managing director.
Eswar Prasad, a former senior official at the International Monetary Fund who is now at the Brookings Institution, explains that China is creating an infrastructure for payments and payment messages that could one day provide an alternative to the international financial system dominated by the West, especially the SWIFT system.
The Financial Times indicated that of the $12 trillion in foreign currency reserves held by central banks around the world at the end of 2021, the dollar represented about 59 percent, according to the latest International Monetary Fund data, and this is down from 71 percent in 1999 when the European currency was launched. Common "Euro".
A recent report prepared by the International Monetary Fund indicated a “hidden erosion of the dominance of the dollar,” pointing to the presence of indications and hints about how the international system will develop in the future, as the use of central bank sanctions is likely to accelerate the erosion process.
Follow Sana's news on Telegram https://t.me/SyrianArabNewsAgency