ABSTRACT
Despite renewed predictions that dollar hegemony has reached its peak, the greenback continues to dominate global trade, finance, and the reserve portfolios of central bankers around the world. But can high inflation, geopolitical tensions, and the sanctions levied on Russia by the US and its allies dent its global dominance? Focusing on the impact of the COVID-19 pandemic, the war in Ukraine, the sanctions on Russia, and the “steep hike” of interest rates by the Federal Reserve, this chapter reassesses power relations in the international monetary system and analyzes the state of dollar hegemony. It finds that, although the greenback still reigns supreme, there are certain undercurrents that indicate the slow erosion of the dollar’s global dominance and the gradual shift toward a multipolar currency order. To prevent, or at least slow down, the pace of further fragmentation, the West ought to reevaluate the use of financial sanctions as a foreign policy tool and offer the Global South more of a voice in international monetary relations.
