WASHINGTON – Treasury Secretary Jack Lew warned Wednesday that over using economic sanctions could saturate their potency, driving commerce away from the U.S. and threatening the U.S. dollar's status as the world’s reserve currency.

“The power of our sanctions is inextricably linked to our leadership role in the world,” Lew said in remarks prepared for a speech to be delivered here. “And we must be strategic and judicious in how we apply sanctions to challenging situations around the world.”

“The risk that sanctions overreach will ultimately drive business activity from the U.S. financial system could become more acute if alternatives to the United States as a center of financial activity, and to the U.S. dollar as the world's preeminent reserve currency, assume a larger role in the global financial system,” Lew said.

Lew credited the U.S. sanctions regime for stopping terrorists and drug traffickers and said they have put “meaningful pressure” on governments abusing their own citizens. He also noted the key role they played in responding to Russia’s actions against Ukraine and helped get Iran to agree to curb its nuclear weapons program.

However, he said: “They must remain a powerful option for decades to come. ... And we must be strategic and judicious in how we apply sanctions to challenging situations around the world.”

Lew concluded that “if foreign jurisdictions and companies feel that we will deploy sanctions without sufficient justification or for inappropriate reasons — secondary sanctions in particular — we should not be surprised if they look for ways to avoid doing business in the United States or in U.S. dollars.”

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