The financial structure of the globe will be altered forever as a result of the actions done in the aftermath of the Ukraine conflict.
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| [Collapse of global financial system/EUROPEANS24] |
The Bretton Woods Conference is primarily responsible for the existing US dollar-based global financial transaction system. Bretton Woods, a tiny hamlet in New Hampshire, was the site of the meeting in 1948, after World War II. The United Powers and Western Europe, both of which had just won wars, entered the meeting with the communist states headed by Russia. As the meeting draws to a close, it is mostly dominated by the United States, with participation from European nations and their allies.
The global financial system rests on these two pillars. IMF (International Monetary Fund) and World Bank (World Bank)
United States and Western Europe had the highest votes for a full digestive system in both scenarios. Despite the fact that the majority of its members are developing countries, their influence and influence on the organization's decisions are insignificant. Many of the world's largest economies, including China, were either not members at all or were slow to vote. Due partly to its vast foreign exchange reserves and expanded lending capability, Saudi Arabia is the only country that has been able to raise its vote rights. US and European countries have greater voting power than IMF and WB. Without the input of these two bodies, no decision can be made.
When Bretton Woods was convened in 1944, the British pound was the world's most widely accepted currency for international trade. IMF and World Bank were founded after this meeting, which meant the US dollar became the primary currency. The United States dollar is the world's most widely accepted reserve currency. Another justification was given. At the time, the United States was the only country dedicated to offering a gold-to-dollar exchange rate. It was then determined that 35 was the value of one ounce of gold. To the end of 1971, this method was used. As a result of many conflicts, particularly the Vietnam War, the United States started to create vast sums of money at that time. This resulted in a dramatic increase in their prices. The expense of the United States government then increased. Afterward, Richard Nixon said that he would not be delivering on his pledge to exchange gold for the US currency. To put it another way, he can't exchange the same quantity of gold for his country's enormous wealth. That was the last time the currency rate fluctuated.
The rest of the world was taken aback. They no longer accept the dollar as a reserve currency for the reasons they used to. Money's value has always been controlled by the supply and demand of currency. For example, if the demand for the dollar in our nation grows, the dollar's value versus other currencies will rise. Although there has been internal inflation, the dollar has increased. If the supply of dollars grows again, the exchange rate will be in our favour. Because of this, the nation's central banks are very concerned about the threat of inflation. Among other things, our central bank has effectively maintained a stable currency rate for more than two decades, for example For a long period, the dollar's value has fluctuated between 60 and 7 rupees. The Bangladesh Bank's monetary policy and other monetary policies might be seen as a benefit in this regard. Our exports and foreign currency reserves come into play in this situation.
When importing, however, the price is often paid in US dollars because of the global trading system. The EU members subsequently established a central bank, UCB, to facilitate the introduction of a unified currency. This currency rose to the position of second most important global reserve asset. British pound, Canadian dollar and Australian dollars are also included in this group.
Three years ago, the IMF included the Chinese currency, the yuan, in its Special SDR (Basket of Currency). Consequently, the Chinese yuan started to be utilised in international transactions as a store of value. However, the truth is that the yuan accounts for less than 2% of global commerce. It also reduced to 47% to 48% when the majority of transactions were in US dollars. Even Nevertheless, the US is taking advantage of the fact that the global financial system is built on the US dollar. However, he is being pushed backwards by this lone advantage. The United States government, for example, has unrestricted borrowing authority. Because the world's central banks are printing billions of dollars' worth of foreign currency reserves. As a result, nations with excess reserves purchase US government bonds from the US. As a consequence, money from the United States is being sent back there. In addition, he receives a commission as a result of the payment being made in his native currency. US borrowing is the world's most extensive.
This concept of reciprocal trade gave rise to the Swift protocol at some point. Swift, the Society for Worldwide Interbank Financial Telecommunication, has been facilitating global transactions for a long time. Everything you need to keep your money safe is there: the dollar, euro and yuan. The issue is that the United States, as the world's dominant power, is abusing the exchange system to keep tight control over the global order. If a nation considers it has an adversary, sanctions are imposed on the economy.
In this way, the sanctions-affected nations or states are isolated. The economy imploded. In the aftermath of the Ukraine conflict, Russia has been subjected to significant sanctions. One of the ten largest economies in the world, Russia is home to over 100 million people. Because of US sanctions, Russia will be unable to do business with other nations or purchase their oil and gas, causing issues for a large number of countries. Russia has been denied access to the Swift system in this instance. The international payment system has been misused by the United States and its allies. In the end, it will just cause them more pain.
A two- or three-tiered world will be created as a result of this scheme. The financial structure of the globe will be altered forever as a result of the actions done in the aftermath of the Ukraine conflict. The Bretton Woods Conference established the global financial system, which has been in place for over 70 years, and is now on the verge of disintegrating. There has already been a start to the demolition. Meanwhile, the dollar's dominance will diminish. A new payment system between China and Russia is inevitable if China is able to build one up in the face of a rising yuan. A large number of nations, such as Iran, Venezuela and Pakistan, are eligible to join. Damage to the United States might and should be considerably worse. Unfortunately, there has been no backlash from Americans themselves.
The United States is using both military and economic might in a variety of nations throughout the world. This will have a negative impact on the global acceptability of its financial system. Because the rest of the world trusts his currency. However, the United States will do more damage than good if it violates this trust. Other nations will be motivated to establish their own alternative systems as a result of this.
Within the next ten years, I believe the yuan will overtake the dollar as the world's second-most-reserve currency. With 20% of transactions, the euro is currently in second position. They will retire even more from here. According to Russia, Iran has previously said that sanctions will result in a "financial atomic bomb". As a result, they'll look for other ways to escape it. To prevent a military takeover, the global financial system will be separated into many portions as a consequence of this development. Alternatively, following military superiority might result in a shift in financial policy. The global system may become less centralised if armed force, such as war and violence, is increasingly used. Then the economic system based on blocks will dominate. Even though I can't pinpoint precisely how, I'm certain that the global financial system of the future will be fundamentally altered.
As a result, an alternate World Bank and IMFO will be established. Together, the concerned nations will create a new global payment system and an international monetary reserve. There are a number of development banks that have already begun this path. In Africa, there was one. In the past, China has been in charge of one. India is using the yuan as a reserve currency in the meanwhile. Russia is doing, and Pakistan is doing as well. Bangladesh has been given a contract. Bangladesh is likely to accept the offer only in part. For example, China is stating, "You don't need US dollars, deal with us in yuan, since our currency has worldwide acceptance." "
The global financial system, in my opinion, will never be the same again. The general consensus is that the current state of the global financial system necessitates drastic action.