eichengreen182_guyoaGetty Images_poundrecession guyoa/Getty Images

How Global Currencies End

Whether the dollar retains its global role will depend not simply on the United States' relations with Russia, China, or the BRICS countries. Rather, it will hinge on whether the US brings its soaring debts under control, avoids another unproductive debt-ceiling showdown, and gets its economic and political act together more generally.

KAUAI – Is the dollar poised to lose its dominance of global economic and financial transactions? Many commentators apparently think so.

Russia obviously hopes they are right, given that it has been shut out of the United States’ banking system and suspended from the Society for Worldwide Interbank Financial Telecommunication (SWIFT). China evidently wants to help the process along by encouraging countries to undertake transactions in renminbi. And Brazilian President Luiz Inácio Lula da Silva has called for the BRICS countries (Brazil, Russia, India, China, and South Africa) to create a common currency as an alternative to the dollar.

Russia’s shift away from the dollar, which got underway following its illegal annexation of Crimea in 2014, was prompted by the fear – and then the fact – of US sanctions. More than a few commentators have since warned that other countries, witnessing US “weaponization” of the dollar, will follow the Kremlin’s example.