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Financial Sanctions and the US-Dollar

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  • Carsten Hefeker

Abstract

The paper discusses whether US dollar based financial sanctions will undermine the dollar’s dominant international role. Despite long-standing attempts to reduce the role of the dollar, these have had limited success so far. I discuss why this is the case and why alternatives to the dollar are unlikely to challenge its position at present. However, a fractionalization of the global financial system may happen in the longer run. An important step to avoid such a fractionalization will be to make the use of financial sanctions less unilateral and arbitrary. Trans-Abstract: Der Aufsatz diskutiert, ob Finanzsanktionen die internationale Bedeutung des US-Dollars schwächen werden. Obwohl es seit längerem Versuche gibt, den Einfluss des Dollars zu verringern, sind diese bislang weitgehend erfolglos geblieben. Es wird beschrieben, warum dies der Fall ist und warum es auch auf absehbare Zeit so bleiben wird. Langfristig kann es allerdings durchaus zu einer Fragmentierung des globalen Währungs- und Finanzsystems kommen. Um eine Fragmentierung zu verhindern, sollten Finanzsanktionen künftig stärker koordiniert und weniger einseitig und arbiträr verhängt werden.

Suggested Citation

  • Carsten Hefeker, 2025. "Financial Sanctions and the US-Dollar," Vierteljahreshefte zur Arbeits- und Wirtschaftsforschung, Duncker & Humblot, Berlin, vol. 2(2), pages 197-212.
    • Handle: RePEc:dah:aeqvaw:v2_y2025_i2_q2_p197-212
    DOI: 10.3790/vaw.2.2.197
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    More about this item

    Keywords

    F2; F3; F5; G2;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • G2 - Financial Economics - - Financial Institutions and Services

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