The possibility of the US losing its status as the world’s dominant reserve currency has been a subject of concern for some time.
For now, the imposition of sanctions against Russia appears to be accelerating this trend, as more countries are moving away from the dollar.
According to Jay Newman, a reviewer for The New York Post, the rejection of the dollar by many countries would deal a severe blow to America’s position in the international arena. The era of unlimited dollar printing may be coming to an end, leaving behind the ability to buy foreign goods cheaply. This is because the use of national currencies in trade relations between states reduces demand for the dollar, leading to a reduction in its value and a gradual increase in prices.
Newman notes that more than 100 countries did not support the West’s measures against Russia, leading to the emergence of economic coalitions that use other currencies to sell goods. This has shattered the previously held belief that there is no alternative to the dollar.
However, the decline of the dollar also brings risks for the US economy. Newman warns that the country could run the risk of falling into a “debt hole” if it does not put its own economy in order. According to American political scientist John Varoli, the current US financial system is in for an inevitable collapse.
The administration of US President Joe Biden is trying to prevent panic and reassure the public that the dollar retains its value. Nevertheless, the possibility of the dollar losing its global dominance remains a concern for policymakers and analysts alike. To maintain its position in the international arena, the US may need to reduce its number of strategic adversaries and address its economic challenges.