The Dollar, Weaponized

America started using the dollar system as a geopolitical weapon in earnest after the attacks of September 11th 2001. President Donald Trump has taken this policy to a new level of intensity, using sanctions as his main foreign-policy tool and even targeting allies with “secondary” sanctions that punish anyone who trades with states in America’s bad books. America’s power ultimately stems from its ability to prohibit firms from using its financial system, in turn leaving them isolated and unable to interact with most counterparties. Often the effect is fatal....... Russia has substantially de-dollarised its trade flows, foreign debt and bank assets. ...... Russia, China, India and others are discussing—and signing—bilateral or wider deals to settle trade in national currencies. They are also exploring alternatives to swift, the dominant payments-messaging network, over which America holds sway. Europe, meanwhile, has built Instex, a clearing-house, that could allow its firms to trade with Iran while bypassing America’s financial cops. ...... Central bankers from Europe to China are stepping up work on public digital currencies. These could help bring down the cost of electronic cross-border payments, which is still relatively high. Some foresee the creation of cryptobaskets of reserve currencies. ....... an inflection point has been reached. Since Mr Trump began firing off financial ordnance, his targets have gone from merely musing about breaking free from the dollar to doing something about it ..... the dollar’s current pre-eminence is not an unalloyed good for America: it distorts the currency’s value (upwards) and market interest rates (downwards). ...... Some economists believe the Depression was partly caused by the absence of a hegemon to steady the world economy.