At the end of January, Russia held foreign currency reserves worth $469bn. This hoard was born of the prudence taught by its 1998 default and, hoped Vladimir Putin, also a guarantee of its financial independence. But, as his “special military operation” in Ukraine began, he learnt that more than half of his reserves were frozen. His enemies’ currencies ceased to be usable money. This action is not only significant for Russia. A targeted demonetisation of the world’s most globalised currencies has big implications.

Money is a public good. A global money — one that people rely upon in their cross-border transactions and investment decisions — is a global public good. But the providers of that public good are national governments. Even under the old gold exchange standard, that was the case. In our era of fiat (government-made) currency, since 1971 that has been even more obviously the case. In the third quarter of 2021, 59 per cent of global foreign currency reserves were denominated in dollars, another 20 per cent in euros, 6 per cent in yen and 5 per cent in sterling. China’s renminbi still made up less than 3 per cent of global reserves. Today, global monies are issued by the US and its allies, including small ones. (See charts.)

This is not the result of a plot. Useful monies are those of open economies with liquid financial markets, monetary stability and the rule of law. Yet the weaponisation of those currencies and of the financial systems that handle them undermines those properties for any holder who fears being targeted. Sanctions on Russia’s central bank are a shock. Who, governments ask, is next? What does it mean for our sovereignty?