My take: The weaponization of finance threatens the future
of the dollar standard
https://thehill.com/opinion/finance/596116-the-weaponization-of-finance-may-threaten-the-future-of-the-dollar-standard
https://thehill.com/opinion/finance/596116-the-weaponization-of-finance-may-threaten-the-future-of-the-dollar-standard
Powerful countries that bully weaker ones and target
non-combatants are bound to invite a strong response. In the context of the
ongoing war in Ukraine, any direct Western military action can essentially be
ruled out (the Cold War concept of Mutual Assured Destruction (MAD) is still in
play if it involves a direct conflict with Russia). This has led many to call
for wide-ranging financial sanctions and restrictions to be imposed on Russia.
The decision to remove several Russian banks from the SWIFT financial messaging system and sanction the country’s central bank has been popular among the general public but has raised concerns on Wall Street. Further sanctions on Russian commodity exports might roil the global market and further fuel the inflationary dynamics that have caused food and energy prices to skyrocket in recent weeks and months. Potentially destabilizing consequences for the emerging and developing world cannot be ruled out.
Given the heated global political environment, it is necessary to inject a note of caution into ongoing debates centered on the weaponization of dollar-based global finance. If we take a step back and calmly evaluate the potential long-term strategic and economic threats facing the U.S., one in particular stands out. ...
The decision to remove several Russian banks from the SWIFT financial messaging system and sanction the country’s central bank has been popular among the general public but has raised concerns on Wall Street. Further sanctions on Russian commodity exports might roil the global market and further fuel the inflationary dynamics that have caused food and energy prices to skyrocket in recent weeks and months. Potentially destabilizing consequences for the emerging and developing world cannot be ruled out.
Given the heated global political environment, it is necessary to inject a note of caution into ongoing debates centered on the weaponization of dollar-based global finance. If we take a step back and calmly evaluate the potential long-term strategic and economic threats facing the U.S., one in particular stands out. ...
Recent moves by the West to weaponize dollar-based global
finance may yet provide the necessary spur for China to speed up measures to
reduce its reliance on the U.S. dollar and create an alternate global financial
payments system. Furthermore, given China’s increasingly aggressive stance
towards Taiwan, a future flare-up with the U.S. cannot be ruled out.
If, for instance, the U.S. were to abandon its stance of “strategic ambiguity” in regards to defending Taiwan, China is likely to respond militarily. Having observed the West’s reaction to Russian aggression, China will rationally conclude that any significant exposure to the SWIFT network and the dollar-based global financial system will curtail its options.
If, for instance, the U.S. were to abandon its stance of “strategic ambiguity” in regards to defending Taiwan, China is likely to respond militarily. Having observed the West’s reaction to Russian aggression, China will rationally conclude that any significant exposure to the SWIFT network and the dollar-based global financial system will curtail its options.
China, Russia and the race to a post-dollar world
https://www.ft.com/content/e5735375-75df-4859-bbf0-ae22e4fe2ff6
China Can Bypass SWIFT by Putting Digital Money in
Play
https://www.bloomberg.com/opinion/articles/2022-02-27/china-s-digital-yuan-could-get-a-boost-from-putin-s-war-in-ukraine
https://www.ft.com/content/e5735375-75df-4859-bbf0-ae22e4fe2ff6
https://www.bloomberg.com/opinion/articles/2022-02-27/china-s-digital-yuan-could-get-a-boost-from-putin-s-war-in-ukraine
The West’s Plan to Isolate Putin: Undermine the Ruble
As Sanctions Batter Economy, Russians Face the Anxieties of a Costly War
https://www.nytimes.com/2022/02/28/world/europe/russia-economy-sanctions-ukraine.html
U.S., European allies freeze ‘Putin’s war chest’ as Russia careens toward economic crisis
https://www.washingtonpost.com/us-policy/2022/02/28/white-house-europe-russia-ukraine-sanctions/
U.S. Prods Exchanges to Thwart Crypto Use by Sanctioned Russians
Putin's War Shows West Must Clean Up Dirty Money
https://www.bloomberg.com/opinion/articles/2022-03-01/putin-s-war-shows-west-must-clean-up-dirty-money
https://www.theguardian.com/business/2022/feb/28/boris-johnson-promises-uk-property-register-to-expose-kleptocrat-money
Economic
Historian Adam Tooze on the Russia-West conflict: