Hungarian Conservative

‘In the end, the USD’s centrality to the system of global payments also increases the power of sanctions it imposes on other countries or individuals. In truth, since almost all trade is done in American dollars, even trade among other countries, they can always be subject to US sanctions because they are handled by so-called correspondent banks with accounts at the Federal Reserve. By cutting off the ability to transact in USD, Washington can make it uncomfortable for those it blacklists to do business.’

In the short term, the process of de-dollarization is exploiting the current state of the business cycle in the US and EU. Just a small decrease in the number of transactions in which the dollar is denominated will cause a devaluation of the dollar and a prolonged state of higher interest rates in the US, together with quantitative tightening—all leading to a weakening of the economic position of the US, the EU, and the other G7 countries.