by Weaponising the dollar will only catalyse this process of de-dollarisation. The basis of any financial system or fiat currency is trust. The British pound bears the legend “I promise to pay the bearer one pound” as the note is not money qua money, but a note of promise to pay money to the holder of the note, originally in the form of gold. Using money as a weapon undermines this trust. The use of dollars as the currency of preference gives the US enormous geopolitical power and at the same time being the reserve currency of choice it also creates an enormous pool of money for the US government to draw on in its own borrowing. Undermining that trust and penalising Russian banks will only drive Russia closer into the arms of China, with which Russia has already been actively developing an
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Weaponising the dollar will only catalyse this process of de-dollarisation. The basis of any financial system or fiat currency is trust. The British pound bears the legend “I promise to pay the bearer one pound” as the note is not money qua money, but a note of promise to pay money to the holder of the note, originally in the form of gold. Using money as a weapon undermines this trust.The use of dollars as the currency of preference gives the US enormous geopolitical power and at the same time being the reserve currency of choice it also creates an enormous pool of money for the US government to draw on in its own borrowing.
Undermining that trust and penalising Russian banks will only drive Russia closer into the arms of China, with which Russia has already been actively developing an alternative payment system. Moreover, China will be equally concerned by Russia’s exclusion from the dollar settlement system, as clearly Biden’s agenda is to deal with the China problem next and Beijing will be next in line for the same treatment. Other countries that are also on the US problem list will be equally concerned and also want to have alternatives to the dollar system. None of this is in the US long-term strategic interest....