With the Trump administration's reimposition of financial sanctions on Iran, the power of the weaponized dollar is yet again making headlines—and putting distance between the United States and its allies. The dollar's special status as the world's key currency affords the United States an unrivaled sanctioning power. Because access to dollars is a near-necessity for multinational businesses and financial institutions, the United States can unilaterally impose costly sanctions by denying such access to a target—whether a state, company, or individual. This capability is one form of the “exorbitant privilege” afforded to the United States by the dollar's international role. This essay considers why the dollar's status affords the United States this sanctioning power and how the United States exercises it. I first summarize the nature of the dollar's role. Next, I explain the means by which the United States has weaponized that role, especially through financial sanctions. I conclude by offering some potential limitations on that power and exploring the ways in which other countries might seek to erode it.
Email your librarian or administrator to recommend adding this journal to your organisation's collection.
* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.
Usage data cannot currently be displayed