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Growing US Debt to 'Hasten Demise' of Dollar as World Reserve Currency

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Career diplomat and Council on Foreign Relations President Richard Haass claims that the growth of the public debt in the United States, now approaching $14 trillion, could cause the US dollar to lose its global reserve currency role.

WASHINGTON (Sputnik) — The growth of the public debt in the United States, now approaching $14 trillion, could cause the US dollar to lose its global reserve currency role, career diplomat and Council on Foreign Relations President Richard Haass said on Wednesday.

"Mounting debt will hasten the demise of the dollar as the world’s reserve currency," Haass told members of the US Senate Foreign Relations Committee in testimony on the strategic implications of the US debt.

Haass warned that a "post-dollar world" will be more financially costly for the United States and will negatively impact the country’s political leverage to impose dollar-related sanctions.

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Since the end of World War II, the US dollar has been the dominant currency in world trade. At the end of 2015, the Chinese yuan was included in the International Monetary Fund’s basket of currencies, a critical determinant of world currency valuations.

Haass argued that the demise of the US dollar would occur as a result of a "loss of confidence in US financial management."

Such development can come because of concerns about the ability of the United States to do "what it should be doing to manage the US and indirectly world economy," Haass explained.

The inability of the United States to handle its massive debt load will "detract from the appeal" of the US model, making the world "less democratic and… less deferential to US concerns in matters of security, Haas added.

According to Congressional Budget Office estimates, the US public debt stands at approximately 75 percent of the country’s gross domestic product.

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