US Sanctions Power
How the dollar's dominance gives America unparalleled sanctions leverage — and why some countries want to change that.
The Dollar as a Weapon
The United States wields sanctions power unmatched by any other country, and the foundation of that power is the US dollar. The dollar accounts for roughly 58% of global foreign exchange reserves and is used in about 88% of all foreign exchange transactions. Almost all international oil trade is denominated in dollars.
This means that virtually every significant international financial transaction touches the US financial system at some point — giving the US government legal jurisdiction. The Office of Foreign Assets Control (OFAC), housed within the Treasury Department, administers and enforces US sanctions. It maintains multiple sanctions lists and can designate any individual, entity, or vessel worldwide.
The sheer volume of US sanctions has grown dramatically: the US had active sanctions programs against over 30 countries by 2023, and the number of designated entities has grown from around 900 in 2000 to over 12,000. Some analysts worry that the US is 'overusing' sanctions, risking their effectiveness and accelerating efforts to create alternative financial systems.