Blockchain Threatens USD

You will note more and more stories of late adding weight to the pressure on the USD as the world’s reserve currency.  Many of these revolve around China (most recently here and here) or the IMF’s plans for the SDR (Special Drawing Rights), the latest of which saw their chief (Christine Lagarde) over the weekend publicly contemplate a blockchain based, bitcoin style, crypto SDR in the future to help achieve just that.

Russia too is one to watch.  The recent visit of Saudi’s King Salman to Moscow certainly drew a lot of attention.  Saudi has long been a staunch ally of the US and integral to the petro dollar agreement which is a huge support to the USD’s reserve status.  The Saudi’s are non too happy about the US acceptance of Iran and Russia looks to be capitalising on this.

Jim Rickards recently wrote:

“The World Gold Council has reported that the Central Bank of Russia has more than doubled the pace of its gold purchases, bringing its reserves to the highest level since Putin took power 17 years ago.

Russia’s desire to break away from the hegemony of the U.S. dollar and the dollar payment system is well-known. Over 60% of global reserves and 80% of global payments are in dollars. The U.S. is the only country with veto power at the International Monetary Fund, the global lender of last resort.

Perhaps Russia’s most aggressive weapon in its war on dollars is gold. The first line of defence is to acquire physical gold, which cannot be frozen out of the international payments system or hacked.”

In addition to being party to the new Chinese gold backed yuan oil contracts, he reports that the Russians have created an alternative to the US dominated SWIFT international payments platform.

“Russia’s development bank, VEB, and several Russian state ministries are reportedly teaming up to develop blockchain technology. They want to create a fully encrypted, distributed, inexpensive payments system that does not rely on Western banks, SWIFT or the U.S. to move money around.”

The blockchain keeps rearing its head as a ‘new currency’ vehicle that mounts pressure on the USD hegemony.  Any weakening of the USD is normally great for gold….