I’ve written for years about efforts underway by Russia, China and other U.S. adversaries to implement alternatives to the U.S. dollar payment system. Today, the dollar represents 60% of global reserves, 80% of global payments and almost 100% of global energy purchases. That kind of dollar dominance has aggravated friends and foes alike since the 1960s.

Lately, the annoyance is even worse because the U.S. has weaponized the dollar to pursue geopolitical goals over and above financial goals. The list of countries suffering under U.S. financial sanctions is long and getting longer. Among the most prominent targets are Russia (due to Crimea and Ukraine), China (due to the trade wars), Iran (due to its uranium enrichment program and support for terrorism), North Korea (due to its ballistic missile program) and many others including Syria and Venezuela.

What all of these sanctions targets have in common is that the U.S. restricts access to dollar payments channels. In the case of Iran, the sanctions go even further to include the denial of access to SWIFT, the international payments system, which includes euros, yen, sterling and other reserve currencies in its facilities.

While most of the targeted countries have been working on alternatives (including a possible gold-backed cryptocurrency to be jointly launched by China and Russia), actual implementation has been slow in coming. According to this article, that may all be about to change.

Russia and Iran have announced a new payments channel that avoids both SWIFT and the U.S. payments system. The new system involves secure financial message traffic between the two participants, with possible expansion to include Turkey and others in the near future.

This still begs the question as to which currency will be used, since Iran is mostly denied access to dollars. But payments could include the Russian ruble or gold that could be converted to dollars through the Russian banking system and held for the account of Iran in veiled custodial accounts. This is a modest step, but it is a beginning with far more pointed attacks on dollar hegemony yet to come.

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