The Financial Times reported heavily on the sanctions imposed by Russia this week, how did they happen what long term impact will. This is an important topic, and both articles are worth reading at your leisure. (Edit: This means after you’ve done this.)

However, FT Alphaville has some follow-up thoughts on the topic after speaking with a number of experts in the field (involving two current and one former FT Alphavillain). Our biggest takeaway? People seem to be very relaxed about the threat to the dollar.

this possible, has proven overly optimistic over time, but we broadly agree with this assessment. China is the main contender, but it is unlikely to be a realistic challenger until Beijing fully opens its capital account. Even so, who will the world really trust, the US or China?

Even countries that often clash with Washington don’t feel safer with the yuan, as China has shown it is more willing economic sanctions unruly country Taiwan and other issues. For example, India may not like the hegemony of the dollar, but it seems absurd to put a lot of foreign exchange reserves into the yuan, even if China allows it.

The reality is that there are many things that make, support (and break) reserve currency status, and that established reserve currencies will only fall for an extended period of time.As fellow FT Alphavillain Claire Jones wrote Sterling’s lead on Thursday continued into the 1950s, decades after Britain became a middle power.

As with social networks, the advantages of incumbents are enormous. Countries can try to reduce their vulnerability to Washington’s financial sanctions, but they cannot eliminate them (especially if other allies like Europe and Japan join, as they have in Russia’s case).It is said that even if Barry EichengreenAs the father of dollar historians, his dominance of the dollar is more lukewarm than in the past.

Although Eichengreen published an article about “stealth erosionSpeaking about the dollar’s dominance in March, he admitted he was surprised by the dollar’s resilient role in the global financial system, with most of its market share losses going to smaller Western currencies such as the Canadian and Australian dollars rather than USD.RMB.

Here’s Eichengreen:

I think the Trump era might change that conversation a little bit. To put it mildly, capricious U.S. foreign policy has not significantly diminished the unique role of the dollar or U.S. banks. This somewhat reassuring experience, combined with Russia’s unusually aggressive actions, produced a result that I personally did not fully foresee.

We have already seen the difficulties China and Russia have encountered in creating alternatives to Western monetary and financial systems. In fact, the renminbi hasn’t gained much importance as an international reserve currency, and it doesn’t provide much of a back door to Russia’s state.

But the euro failed to gain a foothold as an international currency in its first two decades, and the renminbi hardly did. Movement has moved into these smaller, high-quality currencies.

This is creating a more diversified international monetary and financial system that we have in the past, but not what many of us see. We think we will see a three-pole system dominated by the dollar, euro and renminbi. Instead, we see smaller players gaining ground that the dollar has lost.

In terms of other more far-reaching changes. I still haven’t really seen it. I think this shows that the Chinese-developed RMB payment system – the Cross-Border Interbank Payment System (Cips) – sends information via Swift.

This, however, raises the most interesting implication: if the backlash is likely to be trivial, and the repercussions likely to be severe (most countries would be more vulnerable to such sanctions than Russia), the temptation to use these tools again is overwhelming.

As one veteran investor told us: “This is crossing the Rubicon. Priority really matters. It made a lot of countries realize that the US is willing and able to go after them in an aggressive way. . . any precedent if not Burst in front of you and it becomes a tool.”

Just as how cruise missiles and later drones became an easier and cheaper way to send US Marines – not to mention long-term nation building – financial sanctions could be a tempting weapon for more frequent deployments, Even in the not so clear case that Russia invaded Ukraine. Precedents are created by edge cases rather than monotonic ones.

What’s this John Sarlat Thinking it will happen, he is no stranger to militarizing the world of money. As deputy national security adviser to President George W. Bush, Salat became one of the key architects of the U.S. government’s extensive and often controversial efforts to disrupt terrorist financing networks after 2001.

Salat pointed out to Alphaville FT that the Russian sanctions are not a miracle. They were the natural next step during a decades-long development, deployment, and escalation, some of which he oversaw. Everything against Russia is part of a pre-existing arsenal, whether it’s Swift’s exclusion or central bank reserves being frozen. Only the size and aggression of the opponent is novel:

All of these elements are part of a playbook that has been implemented – but in degrees and calibration. . . This is an extremist approach to a major economy imaginable.

From a financial and economic standpoint, the gloves have come off. . . this is the direction we have been heading for 20 years, in part due to a lack of desire to invest in motivation and to find alternative coercive ways of doing statecraft. . . but until now, I don’t think economic and financial advantage as a core tool of statecraft has been embedded in the transatlantic worldview. (Russia) inspired the idea. . . this battleground has now come to the fore.

Perhaps a new era of financial warfare is coming? Smarter than us, please share your thoughts below.