The U.S. holds great power over international monetary transactions via the SWIFT network system given the USD’s world reserve currency status…It is entirely possible, however, that China and its closest partners might someday implement their own SWIFT system…The world’s players could then choose between the two and, given the resentment that exists worldwide toward the U.S. for the bullying of FATCA, many would likely align with China in their SWIFT system. In doing so it would eliminate their need to comply with FATCA and other draconian U.S. demands [which might well bring about a swift] end to the U.S. dollar as the world’s default currency.
The above introductory comments are edited excerpts from an article* by Jeff Thomas (internationalman.com) entitled The Chinese Dollar.
The following article is presented courtesy of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.
Thomas goes on to say in further edited excerpts:[SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a cooperative society owned by its member financial institutions, is headquartered in Brussels, and operates under Belgian law. It provides a network that enables its member financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. SWIFT does not facilitate funds transfer; rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features. (Source: http://en.wikipedia.org)]
It would be likely that the U.S. would refuse to recognize any such new system. If so, China and its partners would need to say, “It is not meant to replace your existing system, but to interface with it. If you choose to trade with our bloc, you will need to accept the interface.” If this were to happen, it would be a Mexican standoff of sorts, which the Chinese would win, as they could hold out longer than their opponents…
Should the above come to pass, the stranglehold that the U.S. presently has on the world’s banks is likely to break. Unless China sees a benefit to itself in allowing the U.S. to strong-arm its banks with such efforts as FATCA, the U.S. would no longer have the potential power to use SWIFT as an enforcement lever. Furthermore, the resentment that exists toward the U.S., worldwide, for the bullying of FATCA, would attract them to align with China in their SWIFT system, eliminating the need to comply with this and other draconian demands.[A case in point is a report** from The Financial Times that “France’s political and business establishment has hit out against the hegemony of the dollar in international transactions after US authorities fined BNP Paribas $9bn for helping countries avoid sanctions. Michel Sapin, the French finance minister, called for a “rebalancing” of the currencies used for global payments, saying the BNP Paribas case should “make us realise the necessity of using a variety of currencies”…[He was quoted further as saying, in part,] “We [Europeans] are selling to ourselves in dollars, for instance when we sell planes. Is that necessary? I don’t think so. I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade.”” This snippet of information came from www.mediapart.fr. The actual Financial Times article (excellent) is protected by stringent copyright so please go to the actual source** for their complete report.] [Additional information**** from Mark O’Byrne ( info.goldcore.com): “The U.S. dollar has enjoyed reserve currency status for most of the past 70 years. This status confers enormous power to the dollar and allows the U.S. government to fund its trade deficits at very low cost. Essentially reserve currency status means that most countries around the world and their respective banks will hold dollars (and dollar proxies such as U.S. treasury bonds) as part of their trade requirements.
Globally a massive 87% of all currency transactions have the U.S. dollar on one side, that is to say that most international trading involves buy and selling goods and services through U.S. dollars. Most central banks believe that the U.S. dollar is the only realistic alternative for such trade as the market is very liquid and has always been considered very safe.
Never before, to our knowledge, has the U.S. sought to limit, via limitations on access to the USD clearing systems, a key global institution (BNP) and a national champion of an important strategic ally (France), the right to trade internationally.
This policy shift represents an enormous risk for the U.S. and its trading partners and undermines what has always been implied; that by clearing through the U.S. dollar a country can access, safely, the world capital markets while remaining sovereign.”]
I don’t think I can overstress the importance of a possible alternate SWIFT system…
- It has the potential to make a major, major impact on the U.S. ability to dictate its draconian rules to the world.
- With a second SWIFT system in place, combined with the end of the U.S. dollar as the world’s default currency, the U.S. dominance over international financial reporting may well end.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://www.internationalman.com/articles/the-chinese-dollar (Editor’s Note: You absolutely want to be internationalized before the U.S. dollar loses its privileged role as the world’s premier reserve currency and an alternative SWIFT system emerges. At that point, it is likely that desperate measures like overt capital controls will be imposed. Fortunately, there are strategies to internationalizing your savings that are within reach for people of modest means. To accomplish just that, International Man has outlined a low-cost strategy for storing physical gold in Singapore in private vaults—which completely disconnects your savings from the United States. You can see that strategy (for free) here.)