De-dollarization heats up
Jonathan Last has a fairly detailed piece (with links to more details) concerning something called mBridge, which looks to be China’s ‘camel’s nose under the tent’ for dethroning the dollar as the world’s reserve currency.
Read the whole thing. Here are some highlights:
Currently, most of the world uses the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system for carrying out international transactions across multiple currencies. SWIFT runs mostly on the dollar.
mBridge works on blockchain.
• currencies never have to be converted to USD;
• the costs associated with each transaction are comparatively much cheaper;
• transactions clear almost in real time.
Trump tried and failed to fight mBridge with massive tariffs. He then turned to stablecoins, which aren’t an alternative to mBridge, but just a grift for him and his family.
“So in sum:
• mBridge is a threat to the dollar’s status as the world’s reserve currency.
• Biden tried to derail it by cutting it off from Western institutions.
• Instead of getting a Huge, Historic, Very Strong Deal on mBridge with his Good Friend President Xi,
Trump blustered and did his trade-wars-are-easy-to-win act.
• Then he pushed America into stablecoins at the precise moment that his family and
friends were going into stablecoins.
• Then he started (and lost) a (real) war and blew up the American-led global trading
order weeks before mBridge is set to become commercially available.
• And in the process he hurt Saudi Arabia and the UAE, two of the other members of the
mBridge leadership—driving them further into the arms of China.”
So what? Here’s the big picture for the future of the dollar and the United States:
“ • Under the petrodollar system, the vast majority of international oil sales are
conducted in dollars.
•. These sales mostly take place over the Swift system, which is one reason Swift is so
dominant.
• mBridge will be a parallel system to Swift. It will be cheaper and faster. It is backed
by three of the top seven oil-producing nations.
• Once mBridge is operational, the plumbing will exist for an alternative to the
petrodollar system.
• If even a portion of the world moves away from the petrodollar, demand for USD will
fall and de-dollarization will accelerate.
•. If the dollar ceases to be the consensus reserve currency for the world, then America
will find it more expensive to borrow money in order to support our government’s
obligations.
•. At which point our decline accelerates in ways we can barely imagine.
“This is what Donald Trump has presided over. This is what Americans chose”
SWIFT, mBridge and the road to de-dollarization