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THE EUROPEAN Union sees a new deadline on implementing economic sanctions against Russia over the Ukraine crisis expire today, June 30, 2014. But Russia's President Vladimir Putin is turning the tables on the United States to spur a global ‘de-dollarisation’, writes Professor Stefan Hedlund.

Russia is making a concerted attack on the status of the America's greenback dollar as a global reserve currency and is in the process of abandoning the ‘petro-dollar’ as its trading unit for oil and gas.

Russian energy companies have been told to ditch the dollar and sign contracts in rubles and the currencies of partner-countries.

The desire to reduce the use of dollars is in line with China’s aim to promote international use of the Chinese yuan. Other emerging market nations would also like to see reduced American hegemony.

An attack by Russia on the US dollar would be devastating and could, in theory, trigger a stock market collapse in the United States. However, the status of the greenback as global reserve currency is not yet under serious threat, for the simple reason that the alternatives are worse. But the Russian attack may prod the global economy to take a further step on the road to a system without a designated reserve currency.

If Central Banks across the world were to sell off their holdings of US government bonds, then the US economy would be flooded with dollars, causing the currency to plummet, inflation to spike and interest rates to skyrocket.

The consequent rise in the cost of financing government debt would.... Continue reading [on World Review]