The question of the international monetary system is now at the heart of geopolitical tensions. Bitcoin appears as an obvious way to avoid war.
Sergey Lavrov sets conditions
On July 9, Russia assumed the rotating presidency of the United Nations Security Council. The Russian Foreign Minister took the opportunity to come to New York in person.
Sergei Lavrov presented the road map for easing international relations. Russia is primarily asking for “concrete steps regarding the withdrawal of Western threats weighing on the Russian Federation.” In other words, NATO expansion must stop.
The second point was very interesting. The diplomat said that the “Restoring the balance of regional and international power must be accompanied by efforts to eliminate the injustices at the heart of the global economy. In a multipolar world, by definition, there can be no monopoly at the monetary level. […] “.
” Saudi Arabia is considering ways to reduce its dependence on the dollar in the event of the West stealing Russian foreign exchange reserves. The process of de-dollarization is in progress, it cannot be stopped”he later told reporters.
Mr. Lavrov warned that finance ministers and central bank leaders of the BRICS countries are working on creating alternative payment systems. “For example, the president [du Brésil] Lula da Silva actively promoted the idea of creating alternative payment platforms at last year's BRICS summit. Some recommendations are expected to be presented at the Kazan summit in October.”he added.
For Mr. Lavrov, ” the overwhelming majority of nations” calls for an evolution of voting rights within the Bretton Woods institutions (IMF and World Bank). Faced with the United States' right of veto, the envoy said that the BRICS and the Shanghai Cooperation Organization (SCO) now represented the “Gold standard of multilateral relations between great powers.”
Exorbitant privilege questioned
The expression “gold standard” is not insignificant. The Russian and Chinese central banks have been accumulating large amounts of gold since the second Iraq war. This trend was further accentuated in the wake of the 2008 crisis, when the Fed began to monetize public and private debt (QE).
This easy solution is not to the taste of exporting nations like Russia and China, which place their reserves in the dollar (in American debt to be precise).
The dollar is the “pivot” currency. That is, all currencies float relative to it. For example, you don't exchange Korean won directly for Argentine pesos. You have to go through the dollar. A single pivot currency allows for minimal conversion fees.
The greenback has been at the center of the international monetary system since the end of World War II. The end of the gold standard in 1971 did not change anything, thanks to the petrodollar system. In essence, in this system, nations put their trade surpluses into U.S. debt. The figure is about $7 trillion, or 58% of all global foreign exchange reserves.
The resulting “exorbitant privilege” for the United States is that it can run a chronically negative trade balance without the dollar falling. In short, Americans pay much less for their imports than they normally would.
Hence the BRICS' ambition to get rid of the American currency. The share of the dollar in the reserves of countries such as Russia, China and Saudi Arabia has been steadily decreasing for several years now.
Bitcoin, Bretton Woods 2.0
If Donald Trump truly wants to avoid a third world war, he will not be able to ignore the monetary issue.
In fact, maybe that’s why he’s openly calling on Jerome Powell not to cut rates before the presidential election? This scenario makes perfect sense in light of this 2023 exchange between Vice President James Vance and Fed Chair Jerome Powell:
For non-Anglophiles, Senator Vance argues that having the world's reserve currency may not be a gift. For him, it would be better to absorb the trade deficit in order to rebuild the American industrial base, even if the dollar falls. However, fewer imports will automatically translate into inflation, hence the need to keep rates high.
Faced with new customs barriers, China will continue to shun the dollar. It will then be necessary to find a new international reserve currency that can satisfy both powers. This is where bitcoin comes into play…
As Travis Kling stated on CNNbitcoin is a digital store of value, stateless, immutable and decentralized. It is a strong currency at the same time as an extremely competitive network for large international payments. Two-in-one.
Bitcoin is a neutral system that would allow all nations to trade and save on a level playing field. Senator Cynthia Lummis claims that Mr. Trump “sees the potential of bitcoin as a savings technology.”
The former American president even declared this week : “China is interested in it [bitcoin]. He is here to stay”. Incidentally, China's largest bank (ICBC) recently said that bitcoin is superior to gold.
Will he announce the creation of a US bitcoin reserve fund at the Nashville Bitcoin conference taking place at the end of next week?
Don't miss this article: Bitcoin or CBDC? Russia wants both.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
Click here to join 'Read to Earn' and turn your passion for crypto into rewards!
