I feel like there is a consistent talking-past each other in these debates over "dedollarization", with different standards of what defines the "threat", e.g.: A. Restructuring of global capital/reserve flows & BoPs. vs. B. Construction of sanctions-resistant clearing systems.

1/15 Since the 1960s few arguments in international finance have been as exciting as "the coming demise of the dollar", but these arguments seem always to founder on the same set of mistakes. ft.com/content/3e05b4…

Bottom-line: China has to be the source of final consumer demand for a good chunk of its geoeconomic sphere of influence for the RMB to be a regional reserve currency (“Asian Euro”) and to initiate anything like a proto-euroyuan-CGB recycling system. This is quite a ways off.

Zoltan is right to point to cross-border CBDCs as the true medium-term (3-6 yr) threat to the bank-intermediated dollar system (qua monetary panopticon and chokepoint network). See today’s report from the BIS charting progress and pilots here by EMs: bis.org/publ/othp51.htm

My fish brain view of this stuff is China is *attempting* to: 1. Mitigate sanctions risk asap via DC/EP + CIPS w/ GCC/OPEC+ 2. Gradually denominate its import bill in RMB w/ more commodity suppliers 3. Eventually get aligned bloc to issue/hold CNY assets/bonds (cf Bond Connect)

Rather than petroyuan per se, China’s near-term (3-5 yr) priority is expanding settlement rails outside reach of OFAC/FINCEN panopticon & onshoring forwards pricing for energy transition commodities. Thus, DC/EP + CIPS + Stock & Bond Connect + Shanghai Futures Exchange are key.

95%+ of US funding is grants, vs lending; China’s is the opposite. If the avg. African country increased its voting in the UNGA to align w/ China by 10%, it can expect to see its Chinese aid increase by 86%. BRI banks recycle surplus USD seeking yield over UST rate of return.

1. Strategic Competition -> ok w/ other guy gaining as long you gain more. 2. Strategic Rivalry -> try to impose a loss on the other guy as long as you don’t lose. 3. Strategic Enmity -> willing to hurt your own interests as long as it hurts the other guy more. Now moving 2–>3

JP Morgan is quietly helping ByteDance—a Chinese tech firm considered by the US to be a national security threat—develop & expand a global payments platform. Several JPM execs have even flipped over to lead the effort. Jamie D. chose profit over values. forbesmiddleeast.com/money/fintech/…

History has some lessons to teach on the financial and economic precursors to great power war. This short article makes a few important points that we should all bear in mind when evaluating rising geopolitical tensions: encyclopedia.1914-1918-online.net/pdf/1914-1918-…

EMERGING DYNAMIC 3: INTERNATIONAL — MORE CONTESTED, UNCERTAIN AND CONFLICT-PRONE Multi-polar geopolitical system driven by US-China rivalry. Weakening global norms, institutions, & trade. Rising chance of major power war w/ more proxy conflicts & key role for non-state actors.

Long stability in the geopolitical order has bred its discontents. Rising & revanchist challenger states now seek to disrupt this order & reset the terms of the global system. Critically, this geopolitical instability drives, and is reflexively driven by, monetary instability.

Long stability in the geopolitical order has bred its discontents. Rising & revanchist challenger states now seek to disrupt this order & reset the terms of the global system. Critically, this geopolitical instability drives, and is reflexively driven by, monetary instability.