Payment Politics

Abstract

Abstract Chapter 6 presents analyses indicating that US sanctions provoked anti-dollar policy responses and may have led to modest de-dollarization in cross-border payments. First, it considers whether central bank currency swap agreements correlate with US sanctions. Such swap agreements can facilitate cross-border trade settlement in non-dollar currencies. The evidence suggests that sanctions, though not the risk of sanctions, are related to the propensity to sign swap deals. Moving beyond anti-dollar policies to measures of de-dollarization, the chapter demonstrates that sanctioned countries, and those at greater risk of facing sanctions, rely less on the dollar for trade settlement—which suggests a link between sanctions and de-dollarization. The chapter concludes by exploring experimental data from a survey of over 1,000 multinational firms in Vietnam. The data illustrate that information about the growing use of US sanctions increases firm managers’ interest in learning about cross-border payments systems based on the euro or the renminbi.