Market Insights

What Does the Weaponization of Global Finance Mean for US Dollar Dominance?

Our view on the expected impact of Russian sanctions on USD hegemony.

June 2022

After Bretton Woods II, the US Dollar (USD) grew to dominate trade invoicing, credit expansion and as a reserve currency, making it central to the global monetary and financial system. However, the USD’s hegemonic status is not without its own set of challenges.

In the wake of the ongoing Ukraine conflict, Russia experienced the USD problem. The Western Alliance froze nearly half of the Russian Central Bank’s estimated US$630 billion in foreign exchange and gold reserves, approximately 35 percent of Russian GDP, froze assets of several individuals and Russian banks, and severely limited Russia’s access to the SWIFT payment system – though there are carve outs to preserve trade in key commodities such as oil, gas and wheat. Will the dollar’s weaponization impact its trade market dominance?

Our experts Ramu Thiagarajan, Aaron Hurd and Elliot Hentov discuss the factors affecting the dollar's status in the trade world and how they may impact the financial world order.

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