Over the past few months, we’ve followed how the dollar, which was once a symbol of stability, has quietly morphed into something a lot more fragile.
When I covered debt dedollarisation in 2017, it was met with: "Really, the dollar could be replaced as the reserve currency... nahhh."
Now that the freak show that is US politics and policy is revealing itself for what it has actually been for some time, even the mainstream press is being forced to pay attention to it.
Let’s now turn to a part of the story few like to talk about openly: how war, sanctions, and global conflict have long been intertwined with sustaining dollar dominance and why that will end.
After the Second World War, the world created the IMF and World Bank under the Bretton Woods system.
The aim, or at least their flaky sales pitch, was simple: to promote global stability, finance reconstruction, and encourage development. But either by design or drift, the plan altered.
When countries needed help, the loans would arrive, but almost always in dollars, with contracts usually favoring western companies.
In exchange, nations were asked to deregulate, privatize, slash public spending, and open their markets.
The so-called Washington consensus. Sounds bland but understand it, because it’s over. In reality, it tied entire economies to the rhythms of Wall Street and the US Treasury.
Worse still, many countries were pushed into debt traps. Borrow in dollars, grow slowly, struggle when US interest rates rise, and then sell off national treasures to service the debt. Ports, mines, even basic utilities. It’s financial colonialism with a nice, friendly logo.
It’s no surprise that BRICS+ and the Global South are now building have built ) their own pipes. New development banks, currency swaps, local loans, local currency loans.
But here’s the darker truth: when countries tried to break free from this system, it wasn’t just financial penalties they faced. It was tanks, or sanctions.
Iran nationalized its oil in 1979, dared to say no to Western financial dictates, and spent the next four decades under sanctions, coups, and isolation.
Saddam Hussein decided to sell oil in euros instead of dollars in the early 2000s. Eighteen months later, Iraq was invaded, under justifications which crumbled under basic scrutiny.
Muammar Gaddafi tried to create a pan-African gold-backed dinar. NATO planes soon followed. Libya was left shattered, and its dreams of monetary independence buried under rubble.
Venezuela launched the Petro cryptocurrency to bypass sanctions and reduce dollar reliance. It was battered by one of the most aggressive economic siege campaigns in modern memory.
What these cases teach, and what the world has quietly learned, is simple: moving off the dollar is not just an economic decision.
It is a security risk. Challenge the monetary order, and you may find yourself in a bit of trouble.
This is why countries are now de-dollarizing strategically, not ideologically. Gold reserves. Bilateral trade deals. Local currency swaps. Digital currency pilots. Quiet, careful insulation. Not because they hate the dollar. But because they have read the writing on the wall.
And now we arrive at an uncomfortable but essential question: could currency wars replace traditional wars?
In some ways, they already have.
Sanctions are the new sieges. Cutting a country off from SWIFT or freezing its assets achieves much the same as a blockade without a single shot fired.
Payment systems have become battlegrounds. Project mBridge, CIPS, SPFS, BRICS Pay - they are not just convenience tools. They are defensive fortresses against financial weapons.
Central bank digital currencies (CBDCs) bring another layer. Programmable money is being developed which could enforce sanctions automatically, without courts, hearings, or diplomacy.
Programmable digital money is money that can only be spent in certain geographical areas or on certain products. It simply won't work outside of those parameters.
Yes, I am also uncomfortable about that.
This is not science fiction. It is being built in real time. Now. And it means future conflicts may not begin with fighter jets, but with financial exclusion zones.
Because when currencies shift, so too do trade routes, investment flows, and the balance sheets of nations. And those changes will touch every one of us, far sooner than we might think.
To understand the whole structure of dedollarisation, I'm creating a complimentary factsheet which you can register for by emailing info@wwfp.net but if you have a question on the subject, also send me an email to this address also.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
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