Removing Russia’s central bank and a number of commercial banks from the SWIFT international payment messaging system was the shot heard around the world that signalled the start of World War 3. It represented the weaponisation of money in a way and on a scale never seen before.
The whole world has seen this. Never mind what African, South East Asian and South American nations will think when US or European nations want to do business with them via SWIFT. And what will China think now?
They will make it a priority to NOT need the US dollar going forward. Russia and China have already established an alternative cross border transactions system to by pass SWIFT and banks in over a hundred nations are signed up to it. So they were already well on the path to de-dollarisation before the kerfuffle in Ukraine kicked off,. but expect this process to speed up now, particularly before the Chinese invade Taiwan.
It may sound dramatic, but this is a turning point in monetary history. When the US left American soldiers stranded in Afghanistan and rescinded all its promises to Afghans, it effectively told the rest of the world that it couldn’t be trusted as a military ally. The indeciviveness and vacillation of the Biden administration was like giant flag with the word weakness emblazoned on it.
However it has suddenly become fashionable to say what a few years ago would have been unthinkable, that the USA and NATO have brought all this shit down on themselves by repeatedly meddling in the internal politics of nations in all these far flung corners of the earth. There were always going to be consequences. Keep poking The Bear with a pointed stick and sooner or later it is going to get angry.
By canceling Russian banks and thus making life difficult for millions of Russian citizens and businesses that need to move money around globally (via SWIFT) they just announced that the US dominated, petrodollar based monetary system could not be trusted. Unless you play by whatever rules the West wants you to play by you’re out, and your assets are frozen or confiscated so you cannot join another game.
Russia and China saw it coming, western leaders were warned (by Russia and China) that Russia and China had seen it coming but were too arrogant to heed the warning, in fact they were so deeply absorbed in their own pomposity they refused to believe Russia and China were capable of mounting a challenge.
Now that the west has used money as a weapon in this way it opens a gate to the end of USD hegemony and the acceleration towards a bipolar monetary order. This gives the US Federal Reserve, The Bank of England, the European Central Bank (ECB) and other central banks a huge problem. Think it through. China’s PBOC and Russia’s central bank all hold the debt of other central and commercial banks in the form of bonds, and they will draw on those or call them in. That in itself would reduce funding at those banks as swap lines would be canceled (we had a precursor in 2008 to this) as it would involve massive amounts of funding problems.
Sanctions began this process and now eliminating Russia from SWIFT will
accelerate it. Ironically the sanctions imposed by the US / NATO alliance on Russia were always going to hurt citizens of the USA and NATO member states more than their intended target. Millions have already been forced into fuel poverty, food shortages and energy supply problems are already being felt and we are only two weeks in. Russia has had sanctions
for years. They’ve built resistance to them. And they have prepared, developed strategies and put plans in place to avoid dependence on western capital in exactly the way western leaders have not avoided dependence on Russian energy, Russian fertilizer and Chinese manufacturing.
In the political world. A world littered with sociopaths and thugs, Putin is arguably the most experienced thug. In fact, if you listen to his speech it was anything but the rantings of a mad man.
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