BRASIL: The fall of the dollar to less than 40% of global reservesThe central banks’ rush for gold and the BRICS’ tests with alternative payment systems reveal a structural constraint: Maintaining military or financial hegemony in the face of sanctions, frozen assets, and a reshaping of the energy trade.
The petrodollar is described as a central mechanism of financial hegemony, functioning as a recycling machine that channels the continuous purchase of US Treasury bonds. These bonds return to the system as funding for high expenditures, including prolonged wars, sustained by the dollar’s position as a reserve currency.
Any actor considering diversifying reserves or reducing exposure to this system faces immediate risks. The material points to asset freezes, financial sanctions, and other coercive measures as recurring instruments to maintain discipline within the dollar-based system.
At the same time, the demonstration of brute power encounters material limits. The depletion of resources in prolonged conflicts, coupled with the need to print dollars to cover increasing expenses, creates simultaneous pressures on military and financial hegemony, revealing a structural contradiction.
Domination, according to the text, requires ever-increasing resources, obtained through financial plunder and global indebtedness. Borrowing from the world acts as a financial safeguard against rivals, but increases international reliance on the dollar system.
This dynamic leads to a choice considered inescapable. Either the astronomical spending necessary for military hegemony is maintained, exemplified by a proposed budget of US$1,5 trillion for the War Department, or the dominance of the international financial system is preserved.
The material states that it is not possible to sustain both fronts indefinitely. When the calculations are made, certain theaters of conflict become strategically disposable, at least in theory, given the need to preserve the central financial machinery.
Sanctions, frozen assets and the boost to BRICS
In response to the instrumentalization of the US Treasury bond system, described as de facto monetary imperialism, the BRICS emerge as a strategic choice for the Global South. The group coordinates initiatives aimed at creating alternative payment systems.
The key tipping point highlighted was the freezing, described as theft, of Russian assets following Russia’s expulsion from the SWIFT system. The episode involved a nuclear and hypersonic power, amplifying the perception of systemic risk among central banks.
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Following this event, the text indicates that central banks around the world began to turn to gold, bilateral agreements, and to seriously consider alternatives to the dominant international payments system.
The move is described as the first serious structural shock to the international financial system since the end of World War II.
However, the BRICS would not be openly trying to overthrow the existing system, but rather to build a viable alternative.
This alternative seeks to finance large-scale infrastructure and enable transactions that bypass the US dollar, reducing vulnerability to sanctions and asset freezes associated with the current global monetary arrangement.
Venezuela is presented as a critical case in this context.
The central question is whether a major oil producer can survive outside the US dollar system without being economically destroyed.
According to the material, the hegemonic system’s response was negative. It is up to the Global South to demonstrate otherwise, testing mechanisms that reduce dependence on the dollar in strategic transactions, especially in the energy sector.
The relevance of Venezuela on the geopolitical chessboard is put into perspective by the numbers presented.
The country would account for only 4% of the world’s oil imports. China, limiting its specific weight in the systemic dispute.
Iran is described as the key case. About 95% of its oil is sold to China and paid for in yuan, not US dollars, which directly challenges the petrodollar mechanism.
Unity, mBridge, and BRICS Bridge under testing.
One of the scenarios proposed to the BRICS countries envisions the introduction of a non-sovereign trading token based on blockchain, conceived as an alternative to the SWIFT system, which processes at least US$1 trillion in daily transactions.
This token is called a Unit. It is not presented as currency, but as a unit of account intended for settling commercial and financial transactions between participating countries.
The Unit is described as apolitical money. It could be pegged to a basket of commodities or a neutral index, preventing domination by any specific country in the settlement process.
In this sense, it would function similarly to the IMF’s Special Drawing Rights, but restricted to the BRICS structure, with its own governance and objectives.
The text also mentions mBridge, which is not directly integrated into the BRICS laboratory. It is a multi-bank digital currency shared between participating central and commercial banks.
The mBridge includes five members, among them the Digital Currency Institute of the People’s Bank of China and the Hong Kong Monetary Authority. Another 30 countries have expressed interest in participating.
The mBridge Tough program inspired the BRICS Bridge, which is still in the testing phase. This mechanism aims to accelerate international transfers, payment processing, and account management between participating countries.
The process is described as simple. Instead of converting national currencies into dollars for international trade, the BRICS countries exchange their currencies directly.
The New Development Bank, the BRICS bank established in Shanghai in 2015, is seen as the main connectivity node of the BRICS Bridge, playing a central role in financial infrastructure.
However, the process is currently suspended. All of the bank’s statutes are linked to the US dollar, requiring a thorough reassessment before full integration into the BRICS Bridge.
With the bank integrated into the financial infrastructure of member countries, it could handle currency conversion, clearing, and settlement. The material emphasizes that we are still a long way from that stage.