SWIFT has developed an international payment system for CBDCs. It will be operational within one to two years. And Bitcoin?…
SWIFT bets on CBDCs
The Society for Worldwide Interbank Financial Telecommunication has just completed its system of cross-border transfers for central bank digital currencies (CBDC).
SWIFT is a global payments network that processes approximately 20 million international transfers per day. Based in Belgium, it is a private cooperative where the distribution of voting rights depends on the number of transactions carried out.
Unfortunately, and unlike bitcoin, it has become a mechanism of Western domination used to force regime changes by strangling their economies.
The decision to disconnect Russia from the SWIFT network in February 2022 is the latest demonstration of this. Historians who want to chronology the decline of the dollar as an international reserve currency will not forget this date.
The SWIFT network is no longer considered a reliable network by many nations facing Western imperialism. Hence the emergence of competing networks like the Chinese CIPS whose transaction volumes already represent a tenth of those of the SWIFT network.
Not to mention the Russian SPFS or the Asian Clearing Union (ACU) headed by Iran.
“Dedollarization is no longer a voluntary choice of certain countries, it is an inevitable response to the militarization of the dollar”Iranian First Vice President Mohammad Mokhber said last summer.
In other words, it is not certain that emerging countries will again rely on the SWIFT network to core international payments in CBDC. The BRICS club offering refuge to Saudi, UAE and Iranian oil producers is very revealing in this regard.
Another unmistakable sign is the recent drastic reduction in the share of the dollar in its Saudi foreign exchange reserves. President Xi's statements in Riyadh in 2021 have also not gone unnoticed.
Change everything so that nothing changes
Nick Kerigan, head of innovation at SWIFT, declared this week completed trials involving 38 entities including central banks, commercial banks and clearing houses.
The goal is that CBDCs from different countries can be exchanged with each other, regardless of the technologies on which they are based.
Today, 90% of central banks are working on their own CBDC. China is well advanced with trials in real conditions. The European Central Bank is working on the “Digital Euro”.
Furthermore, the Bank for International Settlements is also operating with its own system: mBridge. SWIFT, however, has the advantage of an already existing infrastructure connecting more than 11,500 banks in more than 200 countries.
Finally, let's not forget the IMF which is working on a similar system. This is what revealed IMF President Kristalina Georgieva last summer:
“CDBCs should not be fragmented national proposals […] We need systems that connect countries: we need interoperability. »
When asked who will regulate this platform, an IMF representative responded:
“Central banks remain in control of their reserves. […] It's not like there are strict controls on how these reserves can be used. Countries can specify how their currencies are used. The IMF can play a role in governance […], but it is not a bank. The system will need another entity like the Bank for International Settlements or another entity that already handles international payments [SWIFT]. »
What about Bitcoin?
The question of international payment rails is one thing. The question of the reserve currency is another.
The Chinese central bank has notably propose from 2009 that the dollar (as the international reserve currency) was replaced by the IMF's Special Drawing Rights (SDR).
For Governor Zhou Xiaochuan, it was necessary to create a new reserve currency “not dependent on particular nations and capable of remaining stable over the long term, thereby eliminating the deficiencies inherent in credit-based national currencies.”
[Les DTS furent introduits en 1969 pour soutenir le régime de taux de change fixes de Bretton Woods. Ils tombèrent immédiatement en désuétude en raison de la fin du Gold Standard de 1971.]
Mr. Zhou emphasized on this occasion that he owed a debt to John Maynard Keynes. It was in fact the English economist who made a similar suggestion in the 1940s with the famous “Bancor”.
In short, China is tired of the “exorbitant privilege” enjoyed by the United States. That is to say the fact that they can display a chronically deficit trade balance without this impacting the value of the dollar.
The world is demanding a stateless, non-censorable, non-inflationary reserve currency with its own payment system. Doesn’t that remind you of anything? Bitcoin is the first currency existing in absolutely finite quantity and circulating within an uncensorable global network. Two in one !
The efforts of the IMF, the Bank for International Settlements and SWIFT to do better are futile. No centralized entity can create a censorship-resistant monetary system. Not to mention the temptation to print more and more…
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