Is the USD toast or in accelerated decline leading to toast? Westerners from establishment think tanks and media, swear there is no way USD will ever be displaced. Other westerners warn usage of USD is dropping faster than realized. Asian voices are salivating at a new financial architecture.
1. US/EU seizure of Russian Central Bank reserves, days after Russia attacked Ukraine, will be remembered as the white as*holes genius move that sealed the fate of USD. The entire world realized that USD was weaponized beyond redemption. It’s one thing to sanction and cut countries from SWIFT (Iran), to fraudulently attack others for wishing to dump USD (Iraq, Libya). It’s another thing to unilaterally seize a country’s foreign reserves AND expel it from SWIFT without a formal declaration of war – while in a kinetic proxy war for a chronically corrupt third country (Ukraine).
2. Sanctions, cutting from SWIFT and seizing USD reserves confirmed that US had broken the convention of a global reserve currency i.e. that it must be neutral and freely available. That’s why it’s called a reserve currency. It is the currency of last resort for the purposes of ensuring liquidity globally.
3. China repeatedly said they do not wish the Yuan to be global reserve currency. It’s not freely convertible for good reason. China wants control to prevent against foreign speculation. They know of US attempts to crash the HKD/US peg from 1998 onwards and US accusations that they manipulate the Yuan.
4. China wants Yuan to be global TRADE currency. But the position is nuanced. As the leading advocate for multipolarity China cannot afford to be seen as hegemonic even if it wants to be. That’s why we are witnessing simultaneous currency developments:
➤increasing trade use of Yuan
➤parallel use of Yuan, Ruble and Indian Rupee
➤discussions for commodities based BRICS reserve currency,with Russia taking the lead in its creation
➤expansion of BRICS+ with 19 countries (up from 13) lining up to join who will trade in Yuan, Ruble and Indian rupee or bilateral currency deals
➤China not publicly commenting on Russia and Iran’s intentions to also use cryptocurrency in trade
➤China not publicly commenting when Brazil and Malaysia questioned the continued use of USD
➤China encourages Hong Kong’s FinTech development and tacitly encourages Crypto development as part of One Country Two Systems. They know of the developing Banking, Corporate Finance, TradFi, FinTech, Crypto rivalry amongst HKG, Singapore and Dubai
➤China backs HKG to adopt and regulate Stablecoins
There’s no need for China to directly attack USD. It’s an Asian strategy not to confront, but to divert with alternatives so US has multiple dilemmas with reduced options. USD will remain as global reserve currency but wither on the vine. How quickly it rots is the only question.
US’s only option is perpetual war. China, Russia, Iran, Global South know it. They’re preparing.
