I had an interesting meeting the other day.
It was with a sales representative from an offshore bank. A nice lady -with freckles- from the tropical island of Mauritius (business hub in the Indian Ocean off the east coast of Africa).
The meeting was very pleasant.
Then she casually said: “we advice clients to not use the US Dollar…”
Say what? Not using the world reserve currency?
I have been annoyed with the behavior of the American government with regard to international finance for a while now. This confirmed my assumption.
The world is turning its back on the USD.
Slowly, but surely.
Making International Dollar Payments
One thing you have to understand is that when you make a payment in USD, it always passes through a correspondent bank in New York. Meaning that the vast majority of transactions in the world pass through this bottle neck.
And the last couple of years this has been used to policing the world.
For example. If you make international payments above 10.000 USD there is a chance that the payment gets frozen. You will have to give detailed documentation where the payment is about, who is behind it and what the business relationship is. You will also be asked to email scans of your corporate documents as proof.
I heard of normal businessmen, but Iranian passport holders, whose funds were simply confiscated (Iran is being sanctioned because it poses a risk to the integrity of the financial system. Integrity of the financial system, what a joke. This is just another example how “anti money laundering” legislation can be used for political reasons).
Ok, I will give you another example.
Wegelin was founded in 1741 and one of the oldest banks in Switzerland. They were cut off from the Dollar system. They were bankrupt in two weeks. The admittedly helped Americans evade taxes so there was a case here. But this comes to show the power the US has. And they are not afraid to use it.
…Back to our sales representative…
They apparently experience it daily that people transfers get frozen and all sorts of documents have to be provided. Imagine that you sell products from South Africa to India, but have to wait weeks before some guy in new York has approved what you do.
Believe me, the fact that US policies dictate they way business is being done, is not being appreciated…
If on a certain road to work you get pulled over and harassed daily by aggressive traffic cops, what will you do?
You will likely take a different road…
And the majority of banks already have decided not to take on American clients anymore. The costs of complying with US regulations is simply to high.
Next in line: Dollar transactions.
What Will Happen Next?
As of now, the USD is still supreme. There are simply no good alternatives. The Euro? An pathetic centralization attempt based on lies and a foundation of quicksand.
The Renminbi? This currency does not even trade freely, so this is not even close. And China is a centrally controlled economy with a huge real estate bubble and shadow banking system about to blow. They are not ready yet.
So the world is looking an alternative. It might take months, it might take 10 years.
An alternative will emerge. Someone else, (or something, starts with a G and never gets OLD) else will take over the Olympic flame to lead the world through the next decades of it’s never ending puberty.
But on the long run…
…The Dollar’s days are numbered.