The seizure of some or all Russian assets likely strengthen the Dollar, weaken the Euro, and make Europe even more subservient to the USA.
As for legality, of course there is no legal basis for the seizure, but everyone is far beyond pretending that “international law” is a real thing that exists. Every ostensibly impartial international institution is just a front for one or more world powers.
In the short term this move MIGHT weaken global confidence in the dollar in a noticeable way, but I find that unlikely because seizing Russian assets in the first place had little impact. Yes in the long term the share of the Dollar in global reserves is on a serious decline, but it was already trending downward before the seizure of Russian assets.
The biggest reason why is because the majority of Russian foreign reserves are in European banks, in Euros. Apparently just $5 billion of the total is in US banks. So if some or all of these funds are stolen, that will most likely be a credibility hit on the Euro, not the Dollar.
It needs to remembered that the Euro is fiat currency, and Russian holdings are for the most part not mountains of money in a vault, it’s 1s and 0s on a computer screen. So if those accounts are emptied and spent that will be inflationary pressure on the Euro. On top of that, this money will be used to buy weapons for Ukraine, so it’ll be Euros being traded for dollars then spent on American products. In a supply and demand market, that’ll shift the exchange rate against the Euro in the Dollar’s favor.
That’s the single biggest reason why the USA is in favor of seizing Russian assets and large EU economies like Germany are against it. They understand this move is actually a weapon against the EU, not Russia. The EU is so corrupt and in the pocket of American oligarchs Europeans will likely consent to the move anyway no matter how much it hurts them. In the end, Europeans don’t have to like being under the American boot, they just have to submit to it. They can think rebellious thoughts in silence.
Ian Kummer
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» it’s 1s and 0s on a computer screen
Bingo. Everybody seems to forget that a gold bar will not save your ass when stranded in the desert — no food or water to exchange.
A pile of rubles or euro’s will not magically make shells and tubes appear for Ukraine.
It won’t even support their economy; it can only support imports.