European diplomats are warning that enhanced U.S. financial sanctions against Iran run the risk of forcing the rest of the world to create alternative banking systems that could undermine the long-time dominance of the U.S. dollar.

The issue has come up as the Trump administration considers aggressive sanctions aimed at expelling Iran from the international banking system. As the deadline for sanctioning Iran’s oil industry approaches, the spotlight has shifted to the Society for Worldwide Interbank Financial Telecommunication, an entity led by representatives of major banks from the world’s 10 largest economies that helps banks around the world communicate with each other on transactions.

The United States doesn’t control the global group, but Trump could threaten to ban those board members from working in the U.S. financial system if they help Iranian banks defy U.S. sanctions.

That move is potent because SWIFT “facilitat[es] global and local financial flows” by providing the financial industry a secure way of communicating. By pressuring SWIFT to expel Iran from the network, the U.S. could suffocate the regime’s economy.

But that possibility is also raising questions about how the world might react. One Western diplomat said the move could be enough to accelerate talks about the need for alternative systems that don't rely on the U.S. dollar and U.S. policy, a move that could eventually end up hurting the U.S. dollar.

“At the moment, sanctions are effective because of U.S. financial dominance as the global reserve currency — forcing SWIFT out of Iran could incentivize China or Russia to establish their own SWIFT system, which is not in any of our interests,” the diplomat told the Washington Examiner.

“What is going on with SWIFT could also be applied to Russia or China,” a European diplomat said. “And then what is going to happen to the financial system as a whole?”

“There will be a panic in the Iranian markets, and the Iranian currency will collapse,” an Iranian sanctions expert, speaking about the discussion on condition of anonymity, told the Washington Examiner.

Despite those warnings, many Iran hawks in the U.S. are eager to pressure SWIFT to stop dealing with Iran.

"SWIFT sanctions are a necessary move to keep the renewed U.S. sanctions airtight,” Rep. Peter Roskam, R-Ill., told the Washington Examiner. “Without SWIFT sanctions, Iran would have a far easier time withstanding or avoiding our re-imposed sanctions.”

Russian President Vladimir Putin has stoked fears that the U.S. dollar would be weakened if it went too hard against Iran.

“We are seeing what is happening with the sanctions that are essentially illegal restrictions,” Putin said during a July diplomatic summit in South Africa. “I believe this is a big strategic mistake on their behalf because they are thus undermining confidence in the dollar as a reserve currency. This is the bottom line.”

Iran hawks think that is “political bluster” from the leader of a weak economy. “It's a political tactic to try to scare us into not taking action,” the Iran sanctions expert said. “U.S. sanctions power today is still the dominant force in the world. Will there be a point in 20 or 30 years where the dollar is not dominant? I hope not. We should take steps to prevent that.”

One of those steps could be assuring Russia and China that such a financial nuclear option would not be deployed against them.

“Threatening to expel a country’s banks from SWIFT is one of the most serious financial sanctions possible,” the Foundation for Defense of Democracies, whose leading Iran deal experts support the maximalist implementation of the sanctions, said in a fact-sheet on the debate. "While threats posed by Iran and North Korea may rise to a threshold meriting expulsion from SWIFT as a tool to protect American and indeed global security, policymakers should be hesitant to use this tool as a response to fluid geopolitical crises.”

Roskam thinks it’s necessary in this case and that the risks of a rival financial system to challenge the U.S.-led network is overstated.

“A Chinese or Russian SWIFT alternative would be a backwater of terror financing, money laundering and illicit financial activity by rogue nations,” he told the Washington Examiner. “No reputable bank would engage with such an entity. Additionally, this theoretical SWIFT alternative would not have the ability to conduct business in dollars or to access U.S. institutions and the U.S. financial system as a whole — this would not be a successful or even viable system.”

The Treasury Department warned in May that such sanctions would be imposed, meaning that a failure to put pressure on SWIFT would amount to a climb-down from their most intimidating posture. The question of whether Trump will force SWIFT — which is led by banking officials from the world’s ten largest economies — to target Iran could become a proxy for the debate over whether he’ll flinch if Europe defies the Iran sanctions, according to the sanctions hawks.

“If the Americans back down on pressuring SWIFT to disconnect Iranian banks because it's too hard, it's too dangerous, too risky, they don't want to threaten things of that magnitude, then the Europeans will say,” the Iran sanctions expert predicted, “‘If Trump won't dare to threaten sanctions against board members of SWIFT, why would they ever threaten sanctions against a central bank of Europe of China or of Russia?’”