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The long and winding road that leads to economies backed by a scarce and valuable physical asset like gold, and ends in the current system where gold has been replaced by a government-issued, non-physically backed promissory note, began at Bretton Woods in 1944.
For 80 years, every time one country bought something from another, it had to use the US dollar to pay. This allows the United States to achieve something no previous empire had: export its inflation, finance perpetual deficits, and sanction any country that disagrees with it at the push of a button.
On January 1, 2024, there was an attempt at change. The BRICS. This is a group of countries representing 40% of the global economy. On that date, they began building a parallel payments system.
In July 1944, World War II was still ongoing. Forty-four countries meet in Bretton Woods, New Hampshire, USA. Europe is devastated, Japan is bombed, and China is embroiled in civil war. The United States emerges as the clear winner. The dollar becomes the world's reserve currency in 1971 with Nixon's famous announcement unilaterally declaring the end of the gold standard. All countries must hold dollars as reserves to trade internationally. Raw materials, loans, and everything related to money is priced in dollars. The dollar becomes the international benchmark. It is not only a means of payment; it is the mechanism that allows for the comparison of human labor across the globe. Whoever controls this general equivalent wields immense power. The United States issues as many dollars as it pleases, and all countries must accept them because they need them for trade. The United States appropriates the products of all countries in the world simply by virtue of being the only one that can issue the dollars everyone needs. Countries trade in dollars. When they receive these dollars, they buy US Treasury bonds—in other words, they lend the money the US issued to the US, a macabre feedback loop. It all stays in the family. The same money they issued is now in their reserves to finance domestic consumption and the arms industry. So, countries work, produce tangible goods, sell them, and end up lending the money to the very entity that controls the international financial system. Most people have no idea about this process.
Money gives power. Power is exercised. All global transactions pass through the SWIFT system, the Society for Worldwide Interbank Financial Telecommunication, a network of banks controlled from New York and Brussels. Although it's a cooperative society with 3,500 members, the real power lies with a council made up of the central banks of the G10. If the United States doesn't like what you're doing, all it has to do is disconnect you from SWIFT. You can't trade anything if you're not on SWIFT. They did this with Russia after the invasion of Ukraine, for example. The United States doesn't need to invade militarily; with the push of a button, it can isolate you from the rest of the world.
However, Marx warned more than a century and a half ago that capitalism cannot prevent the creation of its own competitors. The United States needed other countries to industrialize in order to sell them the products it produced. This is how China, Korea, Japan, Brazil, India, and several other countries that are now industrial powers developed. Inevitably, these countries were going to try to create alternative payment methods to SWIFT. China used the dollar system to accumulate massive and colossal reserves. In early 2024, the BRICS, driven by China, announced their expansion and the creation of alternative payment methods to the dollar.
In 2020, China launched the digital yuan. It is the first digital currency printed by a global power. China is building a system that can replace the dollar's monopoly on international trade. The digital yuan operates using blockchain technology but is controlled by the People's Bank of China. Participating countries can transact in digital yuan without having to go through the SWIFT system and its network of intermediary banks that reap enormous profits without lifting a finger. The digital yuan is an alternative financial structure, an alternative world order, that operates without the United States and the intermediary banking system managed by SWIFT. It is a kind of massive de-dollarization.
China created CIPS, the Cross-Border Interbank Payment System, which offers clearing and settlement services to participants. Backed by the People's Bank of China, it was launched in 2015 with the aim of creating an alternative to SWIFT. It already has over 1,000 participating banks in 100 countries. Technically, it's now possible to trade without SWIFT and without ever touching a dollar.
But is this a good idea?
Switching from dollar dependence to yuan dependence is simply changing the owner, not removing the collar. Furthermore, since the digital yuan is a CBDC, on top of being dependent, we are tracked in all our transactions, and they can wake us up at 4 a.m. to tell us that if we don't cover the bank within two hours, they will close our account, according to current legislation. The problem isn't the currency that allows the transfer, but who controls the appropriation of value. Changing the dollar for the yuan, without changing the underlying capitalist system that operates as the L0 operating system, is nothing more than changing the creditor. (See this post of mine from June 2023).
China is a planned capitalist system controlled by a rigid, centralized communist state. Russia is a capitalist economy controlled by a conservative oligarchy, with state planning regarding strategic resources. India is a capitalist economy controlled by ancestral castes, with sectoral planning. Brazil, if it wanted, could be the most important industrial power on the planet, but its elites don't dare to cut their ties with the United States.
The BRICS are not an anti-imperialist corporation. They are not communist countries fighting against the far right in Washington. They are capitalist systems competing against other capitalist systems. The capitalist system itself is not at stake, only who controls it. But the power dynamic between the oligarchic classes and the people is exactly the same. We've replaced SWIFT with CIPS, but the problem remains the same. We are fighting for control of global accumulation. The problem for Washington is accepting that capitalism can evolve into forms they cannot conceive of, even if they remain capitalist systems. The BRICS prefer that the state control the growth of capital accumulation, not the vulture funds of Wall Street, as Washington intends.
The United States still needs Latin America to be a colony, so that it doesn't produce goods that can compete with them. That's why the IMF is constantly proposing structural agreements and indebting all the countries of the region for life. Privatizations and indiscriminate trade liberalization are the cornerstones of its playbook for Latin America. Every time a Latin American country has tried to industrialize, a coup d'état has occurred with the support of the CIA and local oligarchies. The order is very simple: Latin America produces beans and cheap raw materials, and the United States uses them to produce expensive goods and sells them all over the world.
China is no longer synonymous with cheap clothes and low-quality sneakers. Now it produces high-demand electric turbines and ultra-high-speed trains. That's why it's so "generous" in building infrastructure to support these technologies in Latin American countries. It's not out of solidarity; it's because they need to sell their sophisticated products to someone who can use them. It's a new kind of imperialism. It's pure capitalist logic. When China builds a port, it collects interest on loans, sells the machinery, and lays the infrastructure to sell its products in the future. There's no generosity involved. If there are no railway lines, there can be no high-speed trains. What there is, however, is a new, more sophisticated form of capitalism, now called BRICS, instead of the Marshall Plan. There's only one choice between two forms of imperialist exploitation.
But a Latin American worker still depends on a "salary," a fundamental icon of capitalism, even if his/her room for maneuver changes. Of course, there are the local bourgeoisies, who are terrified of change. They prefer to maintain their privileges, which date back to European colonization five centuries ago, and remain untouched.
Conclusion
There is a payment system that doesn't depend on any central bank, any generous state, or any conquering imperialist eagle. It's called Bitcoin. Bitcoin doesn't need SWIFT or CIPS. It doesn't need benefactors because it's pure mathematics. The fact that speculators want to use it on Wall Street as if it were a mere commodity, doesn't alter its nature at all: Bitcoin doesn't have to ask anyone's permission, it isn't issued indiscriminately, and it moves freely across the most tightly controlled borders. Few people know this at the moment.
But this Sun has already seen several empires fall.
Thank you for taking the time to read this.
