WASHINGTON – On Sunday, Treasury Secretary Janet Yellen said that the United States’ economic sanctions against Russia and other nations are jeopardizing the dominance of the dollar, as these targeted countries look for an alternative.
“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 on CNN.
“Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative,” she told Fareed Zakaria in 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.”
According to Yellen, the robust US capital markets and rule of law are necessary for a currency to be used globally for transactions.
She added that no other country has the institutional infrastructure required for its currency to serve the world in this manner.
Yellen emphasized that sanctions are a crucial tool, especially when applied by the United States and its allies in a coalition to impose them.
Yellen was asked about the possibility of using frozen Russian assets to rebuild Ukraine after the invasion.
While she acknowledged that Russia should pay for the damage it caused, she stated that legal constraints limit the use of frozen Russian assets.