U.S. Treasury Secretary Janet Yellen said U.S. foreign policy is pushing countries to look for alternatives to the dollar.
In new testimony before the House Financial Services Committee, Yellen said the U.S.'s increasing use of sanctions to freeze sovereign assets is keeping countries away from the world's reserve currency.
“In the area of sanctions, we have very strong sanctions because the dollar plays an important role in international transactions. Cutting off the ability of foreign banks or other businesses or individuals to transact through the U.S. financial system ...
The more we use sanctions, the more countries will find ways to conduct financial transactions that do not involve the U.S. dollar.”
Concern over the use of sanctions increased dramatically after the United States and its allies froze about $300 billion in assets owned by Russia in response to its invasion of Ukraine.
Back in February, Yellen said she believed the assets should be unlocked and sent to Ukraine to fund the country's long-term reconstruction efforts.
“It is necessary and urgent for our coalition to find a way to unlock the value of these fixed assets to support Ukraine’s continued resistance and long-term reconstruction.
I believe there are strong international legal, economic, and moral reasons to move forward. It would be a decisive response to Russia’s unprecedented threat to global stability.”
