The economist named the main consequence of US sanctions for the US Sanctions will lead to a decrease in the role of the dollar as the world's reserve currency, says economist Branko Milanovic. According to him, the large-scale economic pressure of the Un

US-imposed sanctions lead to the fact that the role of the dollar in the global economy is declining, while the popularity of the yuan and the euro is growing. This was stated in an interview with RBC by an economist, leading researcher at the Stone Center for Socio-Economic Inequality of the City University of New York, professor at the London School of Economics Branko Milanovic. “The United States uses sanctions without much thought. Just take a list of countries: Venezuela, Iran, China, even the European Union, and recently also Switzerland, ”he listed the states and organizations in respect of which American restrictions were introduced. (The U.S. has sanctioned the Swiss company Chimconnect AG for alleged links to weapons of mass destruction programs—banning them from supplying them with any U.S.-origin materials and equipment that could be used in the development or production of chemical or biological weapons.) there are almost no countries left in the world that would not be affected by US restrictions. Under such conditions, it is obvious that people are less inclined to keep money in the US banking system, ”says the economist.

According to Milanovic, the dollar is becoming less of a safe currency for savings. “People prefer to store capital in places like Singapore rather than in dollars or US government bonds. Ironically enough, the sanctions undermine the role of the dollar as a reserve currency,” the economist concluded. However, Milanovic also noted that the dollar will remain the world's main reserve currency for the foreseeable future, but its role will simply decrease. In the summer of 2020, the Bank for International Settlements (BIS) reported that about 50% of cross-border loans and international bonds were denominated in dollars.

In October 2020, for the first time since February 2013, the euro ranked first in the world in terms of share in global payments. In October 2020, 37.8% of money transfers serviced by the SWIFT system were in Eurocurrency. The dollar lagged slightly with 37.64% of global payments.
In third place by a huge margin is the British pound - 6.92%.
The use of the dollar decreased by 4.6 p.p. since the end of 2019, the peak of the US currency in international payments was in April 2015 - 45.3%.

Milanovic's forecast is in line with the statements of a number of other economists. Gary Hufbauer, a researcher at the Peterson Institute for World Economics in Washington, also believes that the dollar's status as the main reserve currency will be subject to erosion in the future. Three factors will contribute to this, he told Newsweek. The first is the growing US budget deficit. In the first eight months of fiscal year 2020 (which began in October 2019), the US budget deficit rose to $1.9 trillion. This fuels the fears of the central banks of other countries about rising inflation and the fall in the value of the dollar, as well as fears about the instability of the US economy and lack of funds for investment. The second reason is sanctions, in particular, against China., Iran and Russia. Finally, thirdly, the euro can compete with the dollar, and the European Central Bank is already taking steps to push the dollar. Undermining the dollar's status as the main reserve currency could lead to additional costs for US companies trading with other countries, as well as increase the cost of borrowing for the state.