All around the world, backlash is brewing against the hegemony of the U.S. dollar, with countries striking deals to settle trade in their local currencies to bypass the dollar. May global leaders say the greenback is being weaponized, used to push the U.S.'s foreign policy priorities. 

Nowhere has that been more evident than in Russia, where the U.S. has brought unprecedented financial pain to bear on Russian President Vladimir Putin’s regime in response to the invasion of Ukraine. 

The dilemma Washington officials face: By increasingly relying on the greenback to fight their geopolitical battles, not only do they risk denting the dollar’s preeminent place in world markets, but they could ultimately undermine their ability to exert influence on the global stage.

To ensure long-term efficacy, sanctions are often better left as a threat and not actually carried out, says Daniel McDowell, associate professor of political science and author of "Bucking the Buck: US Financial Sanctions and the International Backlash Against the Dollar" (Oxford University Press, 2023).

“Maybe the change is marginal now, but even if it ultimately culminates in something that doesn’t dethrone the dollar,” it still matters in how it “can reduce American economic power,” says McDowell.

Read more in the Bloomberg article (via Taipei Times) “Putin’s war ignites backlash against US dollar across the world.”