Washington: – Leading financial institution Goldman Sachs warned that the position of the USD as the leading international currency is under threat. Goldman Sachs has warned in its Research Note that the harsh sanctions imposed against Russia and the foreign debt in the US economy will result in USD losing its importance. The leading financial institution pointed out that the USD is facing challenges similar to those faced by the GBP at the beginning of the 20th century.
A few days ago, the International Monetary Fund and a leading think tank from the United States warned about the threat to the USD. The International Monetary Fund had warned that the countries of the world might reconsider the portion of their foreign Reserves held in USD, given the harsh economic actions taken by the western countries against Russia. Whereas, The Institute for the Analysis of Global Security had said that the rampant use of sanctions by the United States could take many countries away from the USD.
Goldman Sachs, the leading financial institution in the United States, has issued a warning in the Research Note published a few days ago. GBP faced many challenges before losing its position as the leading international currency. Currently, the USD also is faced with similar challenges. At one time, GBP had the distinction of being the reserve currency. Goldman Sachs pointed out that the USD replaced the GBP in the middle of the 20th century.
Economists at Goldman Sachs warned, ‘The US share in international trade is comparatively much less. But at the same time, the USD has a major share in the transactions around the world. The United States has lost its position on the foreign properties front. Increasing foreign debt in the US economy is the main reason for this. At the same time, geopolitical issues like the Russia-Ukraine war are a cause of concern for the United States. The United States is a huge importer and this too is adding to the foreign debt and this could be the most serious problem for the USD.’
The economists at Goldman Sachs pointed out that if the debts increase compared to the GDP, foreign investors may choose to ignore the investments in USD. It has been pointed out that the GBP also went through a similar phase in the last century. Meanwhile, Russian spokesman Dmitry Peskov claimed that the credibility of the USD and Euro has bitten the dust given the sanctions against Russia. Peskov also claimed that the position of the USD as the leading international currency had been jolted. The Russian spokesman warned that more and more countries are keen on transacting in the local currencies and the process has already started.
