Treasury Secretary Janet Yellen says to expect a gradual decline in the dollar’s share of global reserves, but greenback remains dominant (“Gradual decline” is a whopper right up there with “inflation is transitory”)

via businessinsider:

The US should expect the dollar’s share of global reserves to slowly decline, but no alternatives exist that could completely displace the greenback, Treasury Secretary Janet Yellen said on Tuesday.

Her comments came during a Housing Financial Services Committee in response questions about the risk of de-dollarization.

Asked by Rep. Warren Davidson, R-Ohio, on whether US sanctions could impact dollar transactions, Yellen acknowledged that their use has motivated some countries to look for currency alternatives.

“But the dollar plays the role it does in the world financial system for very good reasons that no other country is able to replicate, including China,” she said. “And that is we have deep liquid open financial markets, strong rule of law and an absence of capital controls that no country is able to replicate. It will not be easy for any country to devise a way to get around the dollar.”

Later, Rep. Vicente Gonzalez, D-Texas, further inquired whether the US should slow down the use of sanctions, noting that even traditionally allied nations, such as France, had recently made non-dollar transactions.

“I would say there is virtually no meaningful workaround for most countries for using the dollar as a reserve currency,” Yellen replied.