(CNBC) U.S. Treasury Secretary Steven Mnuchin on Saturday rejected the suggestion that the Trump administration is weaponizing the dollar through its trade-restricting policies with other countries.
“Let me be clear: we are not weaponizing the U.S. dollar,” Mnuchin told CNBC’s Hadley Gamble at the Doha Forum in Qatar. “If anything I would say the opposite; I take great responsibility that people use the dollar as the reserve currency of the world, and the dollar is quite strong — sometimes the president says the dollar is too strong.
“The dollar is strong because of the U.S. economy and because people want to hold dollars and the safety of the U.S. dollar. So because of that, we take sanctions responsibility very seriously — as a matter of fact, I personally sign off on every single piece of sanction that we do.”
Officials in China and Europe have been actively promoting their currencies as substitutes for the dollar when it comes to both reserves and transactions, particularly in the face of expanding U.S. sanctions and protectionist trade policies like tariffs.
The Trump administration has imposed sweeping sanctions including on dollar trade with Iran, North Korea and others in an effort to pressure state actors to rein in behavior that Washington deems destabilizing and against its interests…
This has stunted the ability of European allies and others to trade with Iran, among other countries and entities. So some states are therefore looking to euros and other alternatives — including Chinese renminbi and cryptocurrencies — to carry out trade free of U.S.-imposed restrictions.
Earlier this year, France, Germany and the U.K. set up the Instrument in Support of Trade Exchanges (INSTEX), which uses euros to bypass U.S. sanctions on Iran. While it’s not shown itself to be economically effective, it’s a sign that even allies are seeking dollar alternatives to rebel against U.S. policies they oppose.
Russia’s central bank has also been trying to reduce the number of transactions conducted in U.S. dollars…[read more]