It has been coming for some time now, but the US Dollar is no longer a dominant force. Not because it keeps bleeding value, but because it can simply be replaced by something else. Iran has “dumped” the greenback as a foreign reserve currency in favor of the Yuan.
An Interesting Situation in Iran
Many countries around the world have to deal with US sanctions. Iran is one of those countries, forcing local companies and even government officials to get rather creative. Bypassing such sanctions is often a challenge – and rightfully so – but it seems it can be done in a legitimate manner.
According to local sources. Iran is in the process of adopting a new foreign reserve currency. Instead of using the US Dollar – which isn’t as “powerful” as some people may want others to believe – it will not switch to the Yuan. Not a digital RMB, which is apparently in development by the central bank, but the physical version.
By embracing this new currency, Iran can bypass US sanctions, up to a certain degree. This move is primarily designed to rekindle oil sales, which have taken a significant hit since sanctions were imposed. Additionally, Iran and China have been expanding their business transactions for a while now.
Combined with a deep recession affecting the Middle Eastern country, something had to change. Ongoing geopolitical tensions have not allowed the situation to stabilize in any significant way. Switching “allegiances” is the best course of action.
One also has to keep in mind how Iran has been working on its own digital currency. Not much is known, except that it will avoid the SWIFT system altogether. China and Russia have been building a viable alternative, known as CIPS. It is unclear if this Iranian digital currency will make use of that framework.
International Response Will be Interesting
Developments like these may not mean much to the average person on the street. For everyone who knows how finance works, however, things are very different. This is a clear blow to the US Dollar, but also the existing financial framework known as SWIFT. Changes like these send a clear long-term message to the rest of the world.
Chinese and Iranian officials are responding positively to the change. Whether that will remain the case, is a different manner. Switzerland has already filed a deal with Iran using the SHTA trade mechanism. This will now expand, another sign of bypassing the US Dollar altogether.
This move by Iran may set a very interesting precedent for other countries. Especially regions where US sanctions have been imposed will keep a close eye on this development. What all of this will mean for such countries embracing Bitcoin, has yet to be determined.