But there are reasons to believe that the dollar’s position is not indefectible. The dollar’s share of global currency reserves has dropped to 59 percent, the lowest in twenty-five years according to the International Monetary Fund. Some scholars have argued that the displacement of the U.S. dollar as the global currency reserve can happen fairly quickly. In the long term, this may entail damaging effects for the U.S. economy. In the intermediate-term, it can dull the effectiveness of the sanctions weapon.
This was largely unavoidable. A new era of great power competition means that such a concentration of economic power in Western hands will no longer be tolerable for many. Ultimately, the question is not what currently existing modalities can be used to blunt financial statecraft but what fruit will the resolute and cooperative efforts of America’s geopolitical adversaries and even many of its frustrated allies bear as they become increasingly convinced of the need to displace Washington’s sanctions weapon for their own economic sovereignty or as a national security necessity.