"Often, these efforts to reduce reliance on the dollar have failed; however, in other instances, policies produced modest levels of de-dollarization. Recent responses by China and Russia in this space are especially notable. While the dollar’s position as top international currency is unlikely to be upended by these steps, over time such policies could weaken the coercive capabilities that the United States derives from dollar centrality," says McDowell.

"In response, policy makers in Washington should rethink the guidelines around when, and how, financial sanctions are deployed," McDowell says. "Those new guidelines should emphasize coordination with allies, reconsider the use of so-called symbolic sanctions, and insist on a higher bar of scrutiny for financial sanctions against issuers of potential rival currencies."