When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in.

You've reach your limit of free articles.

Get unlimited access to Worldcrunch

You can cancel anytime.

SUBSCRIBERS BENEFITS

Ad-free experience NEW

Exclusive international news coverage

Access to Worldcrunch archives

Monthly Access

30-day free trial, then $2.90 per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch
eyes on the U.S.

Are The Dollar's Global Currency Days Numbered?

Many countries agree that the U.S. politicizes the dollar by punishing nations who don't abide by U.S. sanctions. With this American approach comes isolation, and the risk of the dollar being replaced as global currency.

The first steps toward the beginning of the end of the dollar's hegemony could begin at the next G20 summit.
The first steps toward the beginning of the end of the dollar's hegemony could begin at the next G20 summit.
Santiago Villa

-Analysis-

BOGOTA — It's not going to happen tomorrow, in a year or even five years. But it's conceivable, even likely, that within ten years, the U.S. dollar will cease to become the reference currency for international transactions. The reason for this is that the U.S. government and American judges have politicized the dollar to an extreme in a world where the country backing it is no longer as dominant as it once was.

The United States is an arrogant power, which, like many other empires (and people), is witnessing its influence decline. Indeed, it is hastening this degeneration by wasting its political and symbolic capital, expending it as if the country still stood at the zenith of its glory.

Because of France, the first steps toward the beginning of the end of the dollar's hegemony could begin at the next G20 summit. Here's why: On June 30, the U.S. Federal Reserve backed a Justice Department and New York district court decision to punish the French bank BNP Paribas, one of Europe's biggest, for routinely violating U.S. sanctions on Iran, Sudan and Cuba. Besides fining the French bank almost $9 billion, the U.S. also suspended approval of its dollar transactions.

French President Francois Hollande is one of several heads of leading economic powers who believes that the United States has gone too far in politicizing the dollar, and he favors putting the topic on the G20 agenda. To punish those who violate U.S. economic sanctions exploits the fact that the dollar is an inevitable part of international transactions. It is one of the few subjects on which France, Germany and Russia publicly agree.

Taking its ball and going home

The United States is actually shooting itself in the foot and isolating its allies. Ironically, President Barack Obama, who pledged to reconcile the White House with the world, has barely managed to make a dent in the isolation his predecessor George W. Bush created.

The United States developed intelligent sanctions as a means of exerting pressure on foreign countries and institutions without resorting to military force. One maneuver it can use — and has with BNP Paribas — is to forbid banks from approving dollar transactions, which is otherwise just a formality in the normal process of international finances.

U.S. judges and government officials who are using this to punish those who defy their sanctions have a right to do so, of course. But it's a short-sighted tactic. To describe the problem simply, if the rich kid doesn't want his buddies to play with his new football, they will eventually look for another one — perhaps less fancy — and leave the rich kid to nurse his top-of-the-line toy alone.

This will take time, and the trend may revert. It is bold and difficult to prophesy this way. The dollar's options are not clear. And the euro, while it may not be in the abyss, is struggling to emerge from the bog of the European debt crisis. The RMB, or yuan, is subject to the excessive influence of the Chinese state. Some have suggested that the emerging economies could conjure up an alternative currency, especially after announcing they would start a development bank. But this wouldn't be possible because their economies and institutions aren't sufficiently stable.

If the world had to decide tomorrow on a new global currency, the most reasonable option would be the pound sterling, given its stability and the almost religious respect British institutions show it. If the United Kingdom were to seize the opportunity, its currency could supplant the dollar in fairly short order.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Green

Droughts To Floods, Italy As Poster Child Of Our Climate Emergency

Floods have hit northern Italy after the longest drought in two centuries. Slow Food founder Carlo Petrini explains how these increasingly frequent events are being exacerbated by human activity.

A woman in yellow stands crying on a bridge surrounded by floodwater

Frederica Pizzuto cries after she sees her newly renovated house for the first time after it has been devastated by a meters-high flood wave.

Oliver Weiken/DPA via ZUMA
Carlo Petrini

-Analysis-

FAENZA By now it is undeniable: on the Italian peninsula, the climate crisis is evident in very opposing extreme events (think drought and floods), which occur close together and with increasing frequency. Until just a few days ago, almost the entire country was gripped by the longest drought in two centuries.

Now, however, extreme rainfall has hit the state of Emilia Romagna in the north of the country causing casualties and displacing over 10,000 people.

In 18 hours, the amount of rain that falls on average in a month has fallen. This has caused all rivers to overflow, flooding lowland towns and cutting off hillside towns due to landslides on many roads. Fields have become lakes and orchards that were at a crucial stage of ripening have been severely damaged.

It would be a blessing if this dreadful situation were a sporadic and isolated phenomenon, but unfortunately this is not the case.

What will happen tomorrow is unknown, yet we know it will happen.

Keep reading...Show less

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Already a subscriber? Log in.

You've reach your limit of free articles.

Get unlimited access to Worldcrunch

You can cancel anytime.

SUBSCRIBERS BENEFITS

Ad-free experience NEW

Exclusive international news coverage

Access to Worldcrunch archives

Monthly Access

30-day free trial, then $2.90 per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch

The latest