Is a new global payment system possible? - ERDAL TANAS KARAGÖL

Is a new global payment system possible?

The U.S. is using the economic order and financial architecture it established after World War II to economically dominate the world and, since the election of Donald Trump as president, it continues to use its economic and political power to threaten countries through the dollar and the international monetary system.

In other words, it built an unjust order and it is using this order to punish in its own way. As a matter of fact, it is doing this in spite of the Western countries with which it established this system, threatening them as well.

Frankly, predicting that this order will not last much longer, the U.S. is trying to continue this by using all the opportunities it has.

Well, is this global order sustainable?

Many Western countries, primarily those that fall in the category of developing countries, openly express that they are not happy with the current course of events.

The U.S.'s trade wars and its threat on countries' economies through the dollar have triggered the developing countries among the G20, namely China, Russia and Turkey - which are the new actors of the global economy - to speed up efforts to stop using the dollar in trade and to develop an alternative payment system.

Meanwhile, the trade wars, as well as the threat to impose sanctions on countries that are not willing to withdraw from the nuclear deal with Iran have caused a commotion in Europe. EU countries are now calling for a global payment system independent from the U.S.

Because, despite EU countries unwillingness to fulfill the U.S.'s every wish, major EU companies have no choice but to abide by these sanctions and, as a result, are left to deal with great costs economically.

As the U.S. is imposing trade sanctions, it is also disciplining countries with the dollar, thus, having the ability to exclude these countries through its financial system.

Most recently, it was the German foreign minister who stated that this situation is highly disturbing and expressed the necessity of establishing a "European Monetary Fund" and an independent SWIFT system (an electronic fund transfer standard in foreign exchange) that leaves the U.S. out.

This outburst is nothing other than an open expression of the significance of Europe strengthening its independence, both economically and politically. As a matter of fact, this outburst should be identified as a step to trigger an alternative system, as well as the redesign of the economic system that was established just after World War II.

Why is a new payment system necessary?

The U.S.-led global finance system does not consist of trade using the dollar alone - so it does not consist of reserve currency.

When money transfers between all banks worldwide are made using the SWIFT system and in dollars, all the transfers automatically need to pass through the U.S.

Taking advantage of this, the U.S. monitors all the money transferals made between countries and in its own way, thinks it has a right to intervene in the transfers. We saw in the past how, during its sanctions on Iran, the U.S. had Iranian banks removed from the international banking system, while the money of individuals and companies was seized.

Thus, even though the fundamental reason underlying trade with local currencies in the recent period is to reduce dollar-dependency, the other reason is to prevent the U.S.'s unjust interventions on any likely money transferals and sanctions on countries.

Therefore, trade using local currencies, a new money transfer system and new institutions will cause the economic system established under U.S. leadership to crack, and accelerate the formation of a new financial architecture.


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