Villeroy: The Independence of the Fed Threatens the Future of the Dollar.

Critical Warning from Villeroy

France's Central Bank Governor François Villeroy stated that the attacks on the independence of the U.S. Federal Reserve (Fed) threaten the role of the U.S. Dollar in the global economy. Speaking at an event in Paris, Villeroy emphasized that recent U.S. policies risk undermining the foundations of the dollar's global dominance by harming the Fed's independence.

Concerns About the Future of the Dollar

Villeroy remarked, “Such policies increase concerns about U.S. fiscal discipline and weaken Washington's global economic integration through tariff implementations.” He also noted that there are growing worries about dollar-based global payments being increasingly used as a weapon. This situation has led some countries to develop alternative payment systems, he stated.

Impact on Global Investors

Villeroy continued, “The uncertainty caused by U.S. policies undermines global investors' confidence in dollar assets, likely leading to a gradual trend towards investment diversification.”

Changes in Currency Markets

European Central Bank (ECB) policymakers have expressed that the uncertainties created by Donald Trump's harsh criticisms of Fed Chair Jerome Powell have created an opportunity for the Euro to strengthen its position in international markets. Villeroy also added that a more multipolar international monetary system could be more stable.