Former Secretary of the State warns of Dollar losing Reserve Currency Status if The U.S defaults on debt
The Former US Secretary of State Hillary Clinton shared her opinion on the potentially catastrophic consequences of the U.S. defaulting on its debt obligations. Her remarks were published in the New York Times on Monday.
- Hillary Clinton emphasized that America needs to pay attention to the debate on the debt ceiling.
- She pointed out that if Dollar loses its status as Reserve Currency it can lead to a financial crisis in America
- Already many countries are making efforts for shifting away from trading in the U.S Dollar.
Clinton emphasized that the debates about the debt ceiling were for paying debts that had been incurred. Rather than authorizing new spending. She compared the skipping mortgage to refusing to pay the debts. But in the case of the latter, the consequences will be global.
She further warned that ignorance can lead to dethroning of the U.S. dollar as the world’s reserve currency would grow much louder. While Dollar has held this status for decades. However, losing it now can have significant economic and geopolitical implications for not only the U.S. but also the world. This raised the concern for Congress to raise the debt ceiling and also avoid defaulting.
Hillary also added that the ongoing debate over the U.S. debt ceiling could have severe consequences for America’s standing in the world.
Moreover, Clinton Argued the notion that the competition between democracies and autocracies has intensified. Now the fight over the debt ceiling is undermining America’s credibility and the pre-eminence of the dollar, in the hands of China and Russia.
She stated that US Dollar is the center of international transactions conducted by people, companies, and governments worldwide. Whereas the pre-eminence of the dollar gives the United States the authority to impose sanctions.
Under such circumstances undermining America’s credibility and pre-eminence of the dollar could shift the countries. From using U.S. dollars in trade settlements may reduce America’s global power and influence. Clinton has warned the U.S. as many Asian countries and BRICS nations are already making efforts of shifting away from trading in the U.S. dollar. This could ultimately lead to a reduced role for the dollar in the Global economy.