Russia and China may try using their natural resources to back their money WashTimesOpEd
, as well as most other countries, hold the majority of their foreign reserves in USDs. Almost all global commodities, such as oil, corn, sugar, coffee, copper and aluminum, are priced and traded in USDs. This gives the U.S. a unique ability to apply financial sanctions on foreign countries, by doing such things as freezing their USD-denominated bank accounts and limiting their ability to clear trading transactions and investments.
Over time, countries find ways around sanctions, but the workarounds tend to be costly and cumbersome. Cuba has been coping with U.S. sanctions for more than half a century., after the initial shock of having many of its USD accounts frozen or blocked and its access to the global financial clearing systems stopped or limited, has already found alternative methods of paying for imports and being compensated for its exports — often at discounted prices.
It is not only countries that are under sanction that resent being tied to the USD, but also friendly countries, which are well aware that they could also face some sort of economic restriction anytime they sufficiently irritate some group of U.S. politicians. Being the world’s global reserve and transactional currency does place an added burden on U.S. policymakers to be prudent and not engage in inflationary monetary policies or reckless fiscal policies.
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