The US and NATO’s decision to remove Russia from SWIFT will lead to devastating blowback. This move could also lead to the destruction of the dollar and end its reign as the global reserve currency.
Since the height of the Cold War and the 2014 incursion into Ukraine, tensions have never been higher between the West and Russia. As information warfare spreads globally and the battle in Ukraine pushes on, talks of removal of Russia from SWIFT are weighed by the West and its allies.
What is SWIFT
In order to process payments for financial institutions around the world, SWIFT serves as the intermediary. In the fallout from the Iran nuclear program Iran was cut from SWIFT. This isolated Iran from the global financial system meaning other countries could not invest, send, or trade with Iran using the US Dollar. Iran’s economy was crippled and has been suffering ever since. Removing a world power such as Russia from the global financial system, will incur unforeseen blowback.
The actions against Iran displayed to Russia and China alike that Washington D.C. and Wall Street centrally control the international payments system, and they can send a nation’s economy back to barter from an easy chair.
Russia, China, and De-Dollarization
While China has led the move towards de-Dollarization, Russia has been moving that direction as well prior to the Ukrainian incursion. In 2021, Russia sold its US treasury holdings and from its $583 billion of central bank reserves, it was reported by Bloomberg, Russia holds more gold than dollars with the Euro as its most held currency and 12% of its holdings in Chinese Yuan.
State-owned companies in Russia, including the 10th largest oil company in the world Rosneft, have removed the dollar from all transactions, and all Dollar assets have been removed from the sovereign wealth fund of Russia. Both Chinese and Russian leaders see the centralized control of the global financial system by the US as a matter of national security.
Since 2010, growing economies such as Brazil, India, and South Africa have looked at exchanging in local currency and getting out of the dollar system. The move to de-Dollarization will only accelerate with more Western sanctions and threats.
The Unforeseen Blowback of Cutting Russia from SWIFT
The current situation in Ukraine, the Dollar dominion, peak Cold War tension, along with the incentive of self preservation, are all driving the search for alternative systems to SWIFT. It is of little doubt the Chinese would aim to trade in their Central Bank Digital Currency and Chinese Communist Party surveillance tool with Russia if they’re removed from SWIFT. Russia will be incentivized to trade in commodities for gold, or Digital Renminbi. The decimation of the US economy would ride the coat tails of the falling Dollar as global trade seeks other options for settlement.
The perfect storm is brewing for Bitcoin.
The SWIFT system has to tackle 42 million messages a days and the ousting of Russia will lead to unforeseen blowback including skyrocketing inflation and the strengthening of Russia and China ties.
Removing Russia from SWIFT would deeply worsen the energy crisis in Europe. Opponents of the idea of removing Russia from the global system, including the firms JpMorgan Chase & Co. and Citigroup, warn of unforeseen fallout if this move were to be taken.
Bitcoin is the solution for all parties, but who will be the real first mover?
- Inflation not seen in over 40 years in the US along with declining faith and belief in the dollar system from major powers. Bitcoin fixes this and provides the West an opportunity to maintain its standing in the world
- Russia being cut from the international financial system along with sanctions puts the country and its people in a desperate situation. 12% of the global Bitcoin market cap resides within Russia. Bitcoin adoption and first mover advantage could protect Russia from the brunt of Western sanctions and allow them to bypass them. If Russia began pricing their main exports in Bitcoin, look out. This would also give Russia an edge of China as well, who is headlong into their CBDC, while protecting their citizens from CCP surveillance.
- China, despite its focus on their Chinese Communist Party CBDC, they still have the opportunity to adopt Bitcoin. If the CCP fails to do so, they may have made an even bigger blunder than they did in the 19th Century in their move to silver as the globe adopted the gold standard setting them back decades.
Honey Badger Doesn’t Care
Depending on how this plays out it could very well end that one of the worst blunders in US history was the move towards demonizing Russia post USSR, the NATO move to their doorstep, the coup in Ukraine in 2014, sanctions, and poor policy leading to blowback. Blowback, that led Moscow to embrace Beijing and the de-Dollarization of Eurasia.
While this global madness continues and as Bitcoin continues to enter the geo-political debate, block after block are verified and distributed, the Bitcoin network is indifferent. Bitcoin doesn’t need the world, but the world needs Bitcoin.
Black Swan, Number Go Up?
Besides the turmoil and warmongering that benefits certain industries, there could be another big winner in this lose-lose game. Millions of Russians are researching bitcoin now, thanks to free advertising from the Ukrainian government and NATO. And don’t forget, although Millions of Russians aren’t very rich, some Russians are very rich. So could the bitcoin price explode when the measures take effect? Twitter polls expect Bitcoin to surge as capital needs to find new ways to flow in and out of Russia.