The U.S. dollar’s status as the dominant global currency has enabled Washington to wield its economic power through the threat of unilateral sanctions, prompting partners and adversaries alike to reconsider their reliance on the U.S. dollar. This was evidenced by the EU’s response to President Trump’s decision to leave the JCPOA and snapback sanctions, with senior officials calling for greater “sovereignty” and the use of the Euro to conduct more trade. Despite this, around 60 percent of foreign exchange reserves of central banks around the world are still held in U.S. dollars, though Washington’s decisions to freeze some assets have made countries reconsider this trend.
What is the future of the U.S. dollar in global trade? Does the ever-expanding U.S. sanctions regime, particularly unilateral sanctions, threaten the popularity of the dollar? What potential implications do competing currencies have for U.S. interests, and to what extent is the supremacy of the U.S. dollar being challenged? What would this mean for U.S. interests?
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