US Treasury Secretary Scott Bessent stood in front of reporters this week and delivered what he called “economic D-Day” against Iran — a sweeping new round of secondary sanctions targeting digital assets, technology, gold, aviation, and shipping, alongside a blunt warning to the rest of the world: any country or entity that keeps doing business with Tehran, or fails to join the sanctions campaign, risks being “removed from the U.S. dollar system.” Asked directly whether that threat extended to China — Iran’s largest remaining trading partner — Bessent didn’t hesitate: “no one is above the reach of U.S. sanctions.” It’s worth asking the question directly: is threatening to expel countries from the dollar system actually a wise use of American power, or is Washington accelerating the exact outcome it’s trying to prevent?
The Core Contradiction
The dollar’s dominance isn’t just a convenience for the US — it’s arguably the single greatest source of American economic leverage in the world, letting Washington borrow cheaply, sanction adversaries effectively, and project financial power globally. That dominance depends entirely on one thing: nearly every country on Earth needing and wanting to use the dollar for trade and reserves, because there’s no workable alternative. The moment credible alternatives exist, that leverage starts to erode — and every time the US threatens to weaponise dollar access itself, it hands the rest of the world a stronger incentive to build exactly those alternatives.
That’s not a hypothetical dynamic. It’s already measurably happening. The dollar’s share of global foreign exchange reserves has fallen from 73% in 2001 to roughly 54% by 2025, according to IMF data — a genuine, sustained multi-decade decline, not a wartime blip. And the countries doing the most to accelerate that decline are doing so explicitly in response to the fear of exactly what Bessent just threatened.
BRICS Isn’t Waiting Around
The BRICS bloc — now eleven nations including Brazil, Russia, India, China, South Africa, Saudi Arabia, the UAE, Iran, Egypt, Ethiopia, and Indonesia, representing something close to 45% of the world’s population and over a third of global GDP by purchasing power — has spent the last two years building the actual infrastructure to route around dollar dependency, not just talking about it. The mBridge platform enables instant central bank settlement between China, Hong Kong, Thailand, and the UAE without the dollar touching the transaction at all. BRICS Pay offers a card-based system for direct local-currency transactions. Russia and China now settle an estimated 90% of their bilateral trade in rubles and yuan rather than dollars. In October 2025, BRICS launched a pilot for the “BRICS Unit,” a settlement instrument backed 40% by gold and 60% by member currencies, drawing on the bloc’s combined gold reserves of over 6,000 tonnes. Central banks worldwide bought roughly 863 tonnes of gold in 2025 alone — the kind of accumulation that only makes sense if you’re hedging against exactly the sanctions risk Bessent just spelled out loud.
To be fair to the sceptics, this isn’t a unified, inevitable march away from the dollar. India — a founding BRICS member — has been explicit and public in its resistance: External Affairs Minister Jaishankar stated plainly that “the dollar as the reserve currency is the source of international economic stability,” and Commerce Minister Piyush Goyal has flatly rejected the idea of a shared BRICS currency, largely out of discomfort at being tied financially to China. That internal division is real, and it’s the single biggest reason a full BRICS currency replacing the dollar remains, by most serious analysts’ own admission, a distant prospect rather than an imminent one.
The Historical Precedent Worth Remembering
This dynamic isn’t new, and it’s worth recalling the most notorious historical episode connected to it, with appropriate care about what’s actually established fact. In the years before his death, Muammar Gaddafi promoted a plan for a pan-African, gold-backed dinar, intended to let African and Middle Eastern oil producers trade outside the dollar system entirely. Some commentators and even a handful of officials in the years since have suggested this played a role in motivating the 2011 NATO intervention that ultimately toppled him — a claim that remains genuinely contested among historians and was never the stated justification for that intervention, and shouldn’t be treated as settled fact. What is fair to draw from it isn’t a conspiracy theory, but a more modest, defensible observation: any state or bloc that has seriously attempted to build a credible alternative to dollar dominance has, at minimum, found itself facing extraordinary pressure from the system it was trying to route around — whether or not that pressure was the primary cause in any single case.
Why the Threat May Backfire on Its Own Terms
Here’s the strategic tension Bessent’s threat runs directly into. Secondary sanctions work precisely because most of the world currently has no real alternative to the dollar system for major international transactions — refusing dollar access is a genuinely severe punishment specifically because opting out isn’t a viable choice for most economies today. But every time that threat gets made explicitly and publicly — “join us or leave the dollar system” — it doesn’t just punish the immediate target. It broadcasts a lesson to every country watching, including allies who aren’t currently in Washington’s crosshairs at all: dollar access can be revoked unilaterally, based on a foreign policy dispute that may have nothing to do with your own economy. That lesson is precisely what’s been driving central banks to stockpile gold, precisely what’s been pushing BRICS to build mBridge and BRICS Pay, and precisely what convinced Russia and China to move 90% of their bilateral trade out of dollars in the first place.
China, explicitly named by Bessent this week as not exempt from potential dollar exclusion despite ongoing US-China trade negotiations and a planned Trump-Xi summit in September, has every incentive to now accelerate exactly the alternative payment infrastructure it’s already spent years building. That’s not a hypothetical response. It’s the same response China, Russia, and much of the BRICS bloc have already been mounting for years, and this week’s threat gives them a fresh, high-profile justification to move faster.
The Honest Assessment
Bessent isn’t wrong that dollar exclusion is a genuinely powerful tool, and there’s a real argument that using it decisively against Iran specifically is justified on its own terms. But the broader strategic question — whether repeatedly, publicly threatening to weaponise the dollar system itself is a wise long-term strategy — has a less comfortable answer. Every time the threat is made loudly and unconditionally rather than applied narrowly and quietly, it adds another data point to the exact case BRICS has been making to the rest of the world for years: that dependency on a currency one government can switch off unilaterally is a genuine strategic vulnerability, not a stable foundation to build a national economy on. The dollar’s dominance has always rested on trust as much as raw economic power. Threats like this spend that trust one press conference at a time — and unlike sanctions themselves, trust doesn’t come back quickly once it’s gone.
