How the US Dollar Became an International Weapon of War
1Description
After Russia's invasion of Ukraine, the US took a number of extraordinary steps to cut Moscow out of the international financial system. The country immediately was hit with a slew of sanctions. It was cut off from the SWIFT payment system and it even had its dollar reserves seized. Prior to that, in 2021, the US took the rare step of seizing dollar reserves from Afghanistan's central bank after the Taliban's re-emergence to power. So how does the US control who gets to hold and transact in US dollars? Where did this power come from? What are the limits to the US policing of its own currency? On this episode of the podcast, we speak with Bloomberg Senior Reporter Saleha Mohsin, author of the new book, Paper Soldiers: How the Weaponization of the Dollar Changed the World Order. We discuss the buildup of this tremendous financial power and also what it means for the dollar's status as a reserve currency going forward.
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This is an excellent episode on the abuse of power practiced by the US because the dollar is the world's reserve currency. However, there are now cracks in this system. When the US put extreme sanctions on Russia, Russia, China and India as well as other south Asian nations started trading in other currencies, including and especially the ruble to buy Russian oil at prices much lower than available to countries observing the US sanctions.