In 2013, the U.S. successfully kicked Iran out of the global payments system called SWIFT, (Society for Worldwide Interbank Financial Telecommunications). SWIFT in the nerve center of the global financial network. All major banks transfer all major currencies using the SWIFT message system.

The U.S. had previously banned Iran from the dollar payments system (FedWire), which it controls, but Iran turned to SWIFT to transfer euros and yen in order to maintain its receipt of hard currency for oil exports. Also, it took the U.S. until 2013 before it could persuade its allies to ban Iran from SWIFT.

This was a crushing blow to Iran because it could not receive payment in hard currencies for its oil. This pushed Iran to the bargaining table, which resulted in the Iran nuclear deal with the U.S. and its allies in 2015.

Now, Trump has negated that U.S.-Iran deal and is putting pressure on its allies to once again refuse to do business with Iran. As this article shows, members of Congress are again pushing to exclude Iran from SWIFT as part of a sanctions program.

The difficulty this time is that our European allies are not onboard and are seeking ways to keep the nuclear deal alive and work around U.S. sanctions to do business with Iran. In the short run, the U.S. is likely to enforce its sanctions rigorously. European businesses will probably go along with the U.S. because they don’t want to lose business in the U.S. itself or be banned from the U.S. dollar payments system.

But, in the longer run, this is just one more development pushing the world at large away from dollars and toward alternatives of all kinds, including new payment systems and cryptocurrencies. One day the U.S. will wake up and impose dollar-based sanctions and no one will care.

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