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Tuesday, September 17, 2024

US Sanctions pushing countries away from dollar to seek alternatives to replace

The US is “very pleased” with strong economic measures, and major banks may decide to diversify their foreign exchange portfolio instead of relying too much on the US dollar, according to the executive director of the Institute for Global Analysis. Security.

“The big banks are starting to ask questions,” said Gal Luft of the Washington-based think tank, adding that they wonder if relying on the dollar and “putting all their eggs in one basket” is a wise idea.

“The United States is very open and very happy when it comes to the use of sanctions and other economic sanctions,” he said.

Luft said the US had taken “unacceptable and unreasonable measures” in recent weeks, such as successfully replenishing Russia’s central bank reserves and removing Russia from its central banking system, SWIFT.

The whole picture is not good because we get today a heart attack over a heart attack.

He said one in 10 countries in the world is subject to some form of US sanctions.

“That has a growing effect and as a result, we are seeing the dollar gradually playing a role with the portfolios of major banks,” Luft said.

His comments come in the wake of a report by the Wall Street Journal stating that Saudi Arabia is in a hurry to negotiate with China for a yuan in exchange for Beijing oil dollars.

Oil is usually valued at US dollars, and that has allowed Washington to drive “huge losses,” he told CNBC’s “Street Signs Asia” on Monday.

The sanctions, however, made governments want to move away from the US dollar, Luft said.

He said the US political elite was “unaware” of the consequences of their actions.

“It’s like a bunch of kids running around with guns shooting everywhere without realizing what they’re actually doing, without considering the growing impact of all of this,” he said.

On the other hand, he lets right and left. On the other hand, you want countries to buy your Treasurys and pay off your debt. That is not a stable situation, ”he said.


‘Heart attack’ in strength

Separately, Luft, a senior adviser to the U.S. Energy Security Council, discussed the uncertainty of global energy markets.

“The whole picture is not good because what we are experiencing today is a heart attack over a heart attack,” he said, pointing to the Covid epidemic and the Russia-Ukraine war, which could be “very serious.”

“Your combination of both [is a whammy] twice,” he said.

Oil prices have fluctuated sharply over the past two years, declining when the outbreak began and escalating when Russia invaded Ukraine in February.

Luft said there was a reorganization of the world’s energy, financial and geopolitical systems, and the emergence of a “new world order.”

He said: “Change has never been more exciting. “It’s always painful, but that’s the only way the world can change from one global system to another.”

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