Options discussed for the imposition of sanctions include export controls, fees for currency manipulation and customs duties, reports Bloomberg, quoted by BNR. The verbal backlash against the dominance of the dollar in the global financial system gained momentum in 2022, when the US began imposing harsh economic sanctions on Russia, a member of the G20. Since then, the Russian Central Bank, government officials and about 2,500 other entities have had limited access to dollars.
Earlier this week, current President Joe Biden signed a law giving him new powers to seize Russian dollar assets to help rebuild Ukraine. The so-called REPO provision was added to the national security package to help Kiev and other US allies that was voted on by both houses of Congress. The measure has alarmed many Republican lawmakers, who worry it will undermine the U.S. dollar’s role in the global financial system.
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BRICS
Brazil, Russia, India, China and South Africa, collectively known as the BRICS countries, discussed de-dollarization at a summit last August. The group is gaining global weight after inviting key oil-producing countries such as Saudi Arabia and the United Arab Emirates this year, along with other countries in a bid to expand it. Saudi Arabia and the UAE currently peg their currencies to the dollar.
Trump’s economic advisers and people in his campaign have talked about taking action against this particular BRICS effort in a possible second term as president. For his part, both publicly and in private, Trump has often said he wants the dollar to remain the world’s reserve currency. “I hate it when countries abandon the dollar,” Trump said in an interview with CNBC on March 11. “I would not allow countries to abandon the dollar because when we lose that standard, it will be like losing a revolutionary war. This will be a blow to our country,” he noted. “With Biden, you will lose the dollar as a standard. It’s going to be like losing the biggest war we’ve ever lost,” he said, blaming Joe Biden’s policies for damaging the dollar.
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A weakening dollar?
The Federal Reserve has been reluctant to start cutting interest rates, and the dollar has recently appreciated, prompting authorities abroad to consider interventions to support rather than devalue their currencies. Earlier this week, however, Politico cited former Trump trade adviser Robert Lighthizer and several of his political allies as saying they would seek to make American trade more competitive by purposefully weakening the dollar under a new Trump presidency.
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Tags: Trump advisers discuss penalties countries abandon dollar
