A possible outbreak of violence in the US after the November 5 presidential election would undermine the dollar's position as the world's dominant currency as international competitors, particularly the BRICS countries, seek to drastically reduce its use, the ag reported. Bloomberg.
A similar scenario after the results of the presidential race “is emerging as an insurmountable risk for investors who have long relied on the institutional integrity of the United States as the basis of the country's economic strength”. At the heart of the dollar's dominance, according to Federal Reserve Chairman Jerome Powell, Treasury Secretary Janet Yellen and their predecessors, is “the rule of law and institutions that transcend individual politicians”.
Ahead of the election, investors are growing concerned that such a foundation will be undermined “amid doubts about former President Donald Trump's willingness to back down if he loses to Vice President Kamala Harris,”, the publication said. Experts do not rule out a major reassessment of confidence in US institutions by international investors in light of the fact that the US is the largest net debtor in the world. Governments, funds and individuals have poured trillions of dollars into the $28 trillion US Treasury bond market. USD and the stock market for 61 trillion. USD, as well as in corporate bonds and other securities, reported ag. Bloomberg.
„If there is a real question about an effective peaceful transfer of power, that could be very troubling not only for our investors, but also for business and economic activity in the United States.“ in general, says former Treasury Secretary Robert Rubin. “The story of American exceptionalism could end if traders lose faith in American institutions,” said Thierry Wiseman, a spokesman for the Macquarie investment group. He did not rule out the possibility that something like this “could happen in the next few weeks if the US election results are inconclusive for several weeks and people can't trust the institutions to resolve any of the disputes.
Fears about the US dollar's ability to hold its ground in the world in the run-up to the presidential election have been heightened by measures taken by international rivals to reduce its use. Earlier, "the leaders of Russia, China, India and representatives of other developing markets held a summit where they announced further actions to develop an independent cross-border payment system,", the agency emphasizes.
According to a survey conducted by the American CFA Institute, two-thirds of the world's investment professionals expect the dollar to lose its status as a reserve currency to some extent in the next five to fifteen years.
As previously reported, representatives of the Republican and Democratic parties in the US Congress fear a possible increase in violence in the country after the November 5 presidential election. Democrats polled by Axios believethat Trump is "almost certain" will want to protest the election results if defeated. They say it could lead to nationwide riots or even another storming of the Capitol by supporters of the policy, as happened in January 2021.
At the same time, Republicans point out that the "real threat" will emerge if Harris loses and Democrats cannot accept his opponent's victory. So Republican Don Bacon noted that the likelihood of violence is “higher if Trump wins”.
Amid such concerns, federal and local law enforcement agencies have already begun beefing up security in Washington ahead of Election Day, and Capitol Police have conducted evacuation drills.