From Dollar Hegemony to Dollar Dominance

Abstract This article describes and diagnoses a major shift in the modalities, uses and legal forms of the international role of the US dollar. Drawing from the work of Ranajit Guha, we argue that the balance between coercion and persuasion has shifted in comparison to the neoliberal era of dollar hegemony (early 1980s to early 2010s) and that this shift has reshaped the legal forms through which the currency power of the USA is articulated. Starting from the position that hegemony does not preclude the existence of coercion, we show that during the neoliberal era dollar hegemony enjoyed the consent of ruling classes around the world. Even when it was used to further geopolitical goals of the US, the US used international institutions, international law-making and co-operation amongst legal authorities in order to socialise its views and interests amongst political and legal elites. In contrast, the Trump administration exacerbated an already unfolding trend of openly coercive usages of currency power and the concomitant adoption of unilateral, highly visible executive or legislative action as the predominant legal forms through which the international role of the dollar is sustained and mobilised. We describe this shift as a transition from dollar hegemony to dollar dominance and argue that it has triggered less visible but equally consequential efforts by other states to hedge, rather than outright abandon, the dollar as the dominant currency of global capitalism.