Michel Sapin is not the first French finance minister to complain about the dollar’s singular position in the international financial system. It is almost 50 years since Valéry Giscard d’Estaing coined the phrase “exorbitant privilege” to denote the dominant role of the greenback in global monetary affairs.
Nor is the BNP Paribas affair that irked Mr Sapin – the French bank has been fined $9bn for breaking US sanctions on Sudan and Cuba – the first time America has thrown around its financial weight to advance its political agenda. In 1956 it used Britain’s dependence on dollar credit to force London and Paris to roll back their invasion of Suez.
BNP Paribas fell foul of US law because the credit it provided to governments subject to American sanctions was denominated in dollars, which is what exporters in other countries customarily require. Once the dollars sourced by BNP’s New York branch passed through the US financial system – through Fedwire or another US-based network for clearing and settlement since there is no other convenient, low-cost way of making dollar payments – they came under US law.