Rubio’s ‘sanction inability’ theory rings funeral bell for US dollar hegemony
Published: Apr 05, 2023 08:55 PM
Illustration: Tang Tengfei/Global Times

Illustration: Tang Tengfei/Global Times

In a video widely circulated on the internet, US Senator Marco Rubio lamented the decline of US dollar hegemony and said "there'll be so many countries transacting in currencies other than the dollar that we won't have the ability to sanction them." At present, with the US' irresponsible monetary policy, especially continuous interest rate hikes, anger and dissatisfaction toward US dollar hegemony have been accumulating. With that as a backdrop, the "sanction inability" theory hyped by Rubio may add fuel to that fire.

For a long time, the US' abuse of its dollar hegemony has been considered a factor pressuring the world economy, but when more countries, especially developing ones, are suffering from US hegemony and paying for its irresponsible monetary policies, it's ironic that some US politicians are only interested in whether the US stands to lose its ability to impose unreasonable unilateral sanctions and coercive measures. This reflects US political elites' habitual hegemonic thinking about the world economy.

In the past, the US established dollar hegemony to keep global finance and currency circulation under its control, but so many years have passed, the US-centered financial system has no longer adapted to the new patterns of global economic development. Although there is no need to deny US dollar will remain the most frequently used currency in the foreseeable future, it should be acknowledged that a global trend toward de-dollarization has already begun. Some within the US political elite are panicked by the possible collapse of US financial hegemony. As they want to disrupt and create obstacles for the trend of currency diversification, they could desperately do anything. In this process, it won't be surprising for them to utter radical remarks, or hype up extreme rhetoric, but such proposition reflects nothing but their inner panic and fear.

Now, as the US' irresponsible monetary policy and the resulting strong dollar become a hazard for global economy, economies across the world have realized the urgency of de-dollarization. China's yuan and some other currencies that have a stable value have become an ideal currency for diversification away from the dollar. In March, media reports noted that China and Brazil had reached a deal to allow the two countries to carry out trade and financial transactions directly in the Chinese yuan or the Brazilian reais, instead of using the US dollar as an intermediary. Rubio has warned that these countries are creating a parallel economy completely independent of the US. His words, to some extent, reflects panic of US political elites to the current trend of de-dollarization and currency diversification, but it should be pointed out that it is not China, Brazil or any other country, but the US itself that sets off the inevitable trend of de-dollarization, partly thanks to the US' irresponsible monetary policy. 

US dollar hegemony comes from the US' position as a critical global economic power and the country's political and economic stability. If the country wants to rebuild global confidence in the US dollar, it should instill more positive factors in the global economy. At the very least, the US should maintain a stable value of its currency and adopt a responsible monetary policy. However, it is regrettable to see the US is traveling in the opposite direction. Apart from the irresponsible monetary policy that has caused havoc around the world, the US has also been increasingly weaponizing US dollar hegemony to impose economic sanctions and create financial volatility at the expense of global economy. 

No one wants to live under the threat of US sanctions. Rubio's "sanction inability" theory has once again highlighted the urgency for countries around the world to cut their reliance on the US dollar, as it adds to the evidence that the US is unlikely to stop its steps in weaponizing US dollar hegemony. 

The author is a reporter with the Global Times.