Dollar's share of world reserves to gradually decline, Yellen admits

The US should expect the dollar's share of global reserves to slowly decline, but no alternatives exist that could completely displace the greenback, Treasury Secretary Janet Yellen said Tuesday during a Housing Financial Services Committee.

Yellen acknowledged that the widespread use of sanctions has motivated some countries to look for currency alternatives.

"But the dollar plays the role it does in the world financial system for very good reasons that no other country is able to replicate, including China," she said.

Yellen cited "deep liquid open financial markets, strong rule of law and an absence of capital controls" as the reasons.

That said, Yellen did not directly answer the question of whether Washington should slow down the use of sanctions, since even traditionally allied countries such as France had recently made non-dollar transactions.

"I would say there is virtually no meaningful workaround for most countries for using the dollar as a reserve currency," she said.

Granny essentially admitted the world has no choice but to recognize the dollar as the global reserve currency...