As I watch the news of the latest US sanctions against Iran, which have been described as the most smothering financial sanctions ever enacted against any country and at any time, I am reminded that extreme conditions result in extreme solutions.
Iran has been under US sanctions for over 50 years; two generations of Iranians have grown up under severe economic sanctions, which have forced their country to develop financial infrastructure and trading strategies to circumvent these sanctions.
Most recently, the SWIFT banking communications system, which connects 200 countries and thousands of banks and other financial systems, blocked the most populous country in the world to face such actions, Russia, from its system.
China witnessed the blockade of Russia, and both China and Russia developed their own versions of the SWIFT system and linked them to each other and to Iran. We are witnessing an amazing forced evolution of parallel banking communication systems, along with a trade settlement system which doesn't use the US Dollar, but instead uses the currency of the countries using the system. Now trade between China, Russia, and Iran is settled with their three currencies—a revolutionary event, which was unheard of for more than 50 years.
Remember that for over 75 years, literally since the end of World War Two in 1948, the US Dollar has been the sole currency used to settle international trade. It is now 2026, so for 78 years, the US Dollar has been the settlement currency for all Global Trade.
Three generations of the world have grown up conducting international trade in the US Dollar. This number, 78 years, is a small timespan when compared to the history of the world. India, China, and Iran, as civilizations, have existed for thousands of years. But the lifespan of a human is short—75 years—so almost all humans alive have grown up settling trade with dollars and using the SWIFT system.
And all countries the US Government blocks from the SWIFT system have suffered enormously. Shortages of food, medicine, gasoline, heating oil, and fertilizer are amongst the vast list of goods which countries rapidly run out of, and the people of such sanctioned countries suffer the most, as the governments the US disagrees with are usually the last to feel shortages.
The rise of the Global South—a group of countries which represent the majority of the world's population and the majority of international trade—and both the development of parallel systems and the shifts in global alignment are reshaping trade dynamics.
I believe that the weaponization of the SWIFT system, originally created to be a neutral tool of international trade, along with the adverse economic effects of the strength of the dollar, are accelerating the evolution and development of systems outside the massive and pervasive global settlement system called SWIFT.
We are watching the weaponization of the SWIFT system create the need for an alternative, and US sanctions against Russia, Iran, and China are accelerating its development.
Meanwhile, the current US Government trade war with its friends, allies, and its named enemies has created a situation where it is possible for the world to resist or refuse to cooperate with this most recent weaponization of the SWIFT system. This US Government practice of using the US Dollar to punish sovereign nations whose trade policies are different from what the US Government wants them to be has long been a thorn in the side of other nations. The government of the USA uses the dollar to control other governments and dictate their behavior. This practice of the US Government to control the trade policies of sovereign nations, through what is essentially economic blackmail, is distasteful and insulting to other countries.
But until recently, the countries of the world had no choice. But now, amid increasingly hostile trade relations with the trading partners of the US in Western Europe and Asia, the rise of the Global South as the majority of the world's population and trade volume, and this latest weaponization of the SWIFT system, the development of parallel systems and the amazing pace of technological development and world adoption of blockchain technology to move money in the form of Bitcoin and stablecoins may be the killing blow to this system of coercion and blackmail used against the world.
As an American, I am a beneficiary of the economic benefits of the US Dollar being the Global Currency. But as a student of history, finance, and blockchain technology, I see technology offering alternatives which are actively shaping the form and structure of a new financial order, which will either include or be outside the SWIFT system. Never discount the first-mover advantages of the SWIFT system.
These alternatives will be embraced by the world, most likely for the same reasons people embrace Bitcoin. No one embraces Bitcoin when their salary is large, their bills are paid, and their family fed. People embrace Bitcoin when they are financially stressed and need an alternative. In the same way, no one would abandon the SWIFT system until the system starts hurting them or they are excluded from it. And everyone watched Russia get excluded from this "Neutral International Trade Tool." So no one watching can feel like it can't happen to them. If it can happen to a world superpower, it can happen to any country. And that is a wake-up call for the world.
Posted Using INLEO
