The US dollar system as a source of international disorder

This paper explains how dollar centrality was weaponised by the U.S. to help maintain order but is now plausibly undermining it, thanks to the lack of a regulatory subsystem governing its use and the development of perverse incentives.We trace how weaponization has disrupted the feedback loops which support the global dollar payment system.The introduction of USbacked cryptocurrency to an already unstable system has made the problem urgent for many global partners.Now, as the US ratchets up pressure, other countries will look to escape dollar power, likely provoking the US to double down in response.The more that other countries look to escape US financial coercion, the more the US will scale it up to pin them into place.This dynamic will likely be exacerbated by the forthcoming launch of the digital Euro, which has been explicitly framed as a measure to reduce Europe's strategic dependence.The feedback loop has become destabilising rather than regulatory; the global dollar system may now be a source of instability rather than stability.