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OpinionComment
Bernard Chan
Bernard Chan

Opinion | Dollar weaponisation is creating a more fractured world

  • Using the dollar to punish countries or keep them in line is causing geopolitical rifts and fears, as seen in the spawning of payment and settlement alternatives
  • Yet what the world needs to rise to its many challenges is more engagement, dialogue and collaboration

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A woman leaves a currency exchange office in St Petersburg, Russia, on May 23. Denying ordinary people access to international financial services has had a serious impact on their livelihoods. Photo: AP
Bernard Chan

Throughout history, currency standards have changed alongside the geopolitical order. Past international currencies have included the Chinese liang, Greek drachma, Roman denarii and Dutch guilder.

For much of the 19th century and the first half of the 20th, the British pound performed the role, and it was after the second world war that the historic Bretton Woods agreement established the US dollar as the global reserve currency through a system that, ironically, was developed so as not to disadvantage any country.

Today, an upswing in media coverage is evident in relation to the use of the dollar as a strategic tool to restrict or isolate the economies of nations that do not adhere to international law or US foreign policy.

Sanctions imposed by Western governments after Russia’s invasion of Ukraine resulted in key Russian financial institutions being excluded from the dollar-denominated Swift financial messaging service. Denying ordinary people access to international financial services has had a serious impact on their livelihoods with many goods and services becoming prohibitively expensive or simply not available.
It seems somewhat contradictory to use the global reserve currency to isolate an entire nation while countries are still buying its oil and gas. However, neither is it acceptable for a nation to use natural resources as a threat to other nations.

While a majority of the world’s strongest economies have fallen in line with the policy in relation to Russia, not everyone shares the same opinion. Such geopolitical acts further deepen divides and make it even harder to engage in meaningful dialogue and overcome complex challenges.

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