As the world’s reserve currency, the dollar gives Washington a powerful influence over global financial markets – a point underlined again this week when a record fine was levelled against France’s leading bank. French banking giant BNP Paribas has agreed to pay $ 8.9 billion (6.5 billion euros) to US authorities for violating sanctions against Iran, Sudan and other countries even though the transactions were not illegal under French or European law. It fell foul of US rules because the exchanges were carried out in dollars, and the huge penalty has sent shockwaves across Europe where other major banks such as Credit Agricole, Deutsche Bank and UniCredit fear they could be next in the cross-hairs of the US authorities. For some, it is a sign that Europe must wean itself off the dollar. ‘The global reach of American standards through the use of the dollar should push Europe to boost the euro as an international exchange currency,’ French Finance Minister Michel Sapin said after the fine was announced. US authorities were able to catch BNP’s embargo violations by monitoring clearing houses for large interbank transactions. Every time a transaction is made in dollars -- wherever it takes place -- it must pass through a computer ‘clearing’ system intended to guarantee its security. That gives Washington huge scope to monitor the financial activities of anyone using the dollar and identify cases like that of BNP. Jerome Sgard, a professor at Paris’s Sciences Po university, says the BNP Paribas case shows how Washington is using the dollar’s reach to extend its political influence. ‘What is new is the crossover between the financial and the judicial,’ he said, according to AFP.
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