It seems that the official U.S. start making some crucial financial centralization enforcement errors making substantial impact on the entire fiat currency doctrine. They entail imposing restrictions on free dollar circulation in the sanctioned countries which spead beyond the banks and exporters and affected ordinary currency account holders. Back in the heydays of Great British Emprire, Brits implemented exactly the opposite doctrine of promotion of the offshore pound by all means, and historians argue it was the offshore pound doctrine that served as one of cornerstone pillars of unabated mightiness of the Crown back then.
Fast forward, as a result of various euro and dollar possession restrictions imposed on ordinary Russian account holders, the latter – even former crypto skeptics! – saw little option but to turn to crypto exchanges in an effort of last resort to safeguard their hard earned savings from devaluation. Consequentially, about a half trillion rubles YTD were withdrawn from regular bank deposits, both ruble and hard currencies denominated, and apparently put into crypto deposits making Bitcoin (BTCUSD) one of the best performing assets in March against the backdrop of U.S. Fed increasing interest rates which would normally be in favor of the global dollar capital inflows.

Several interesting and even prominent authors, two of which are covered below, argue also that the centralized financial system may have entered the uncharted waters, by simultaneously imposing financial sanctions among countries like Cuba, Venezuela and Iran. Russia is a descent of U.S.S.R., the unorthodox country that competed with the U.S. during most of XX century being effectively isolated from the West by infamous iron curtain. Although U.S.S.R. was technologically compromised, some industrial spheres such as oil drilling, space exploration and navigation, are recognized to have been quite successful without any collaboration with the West.

If history is of any indication, this time around there is a realistic scenario that contemporary Russia would survive even the most ruthless sanctions and preserve its integrity. In that case some other countries which also maintain grievances towards the dollar-centralized financial system, known as Bretton Woods System, may become interested to secede thereafter. There may be some kind of secessionist parade, so what we see now are highest bets that put on the table, and there is no way to step back. And, unlike in all other episodes of history, when emerging of new superpowers always happened to be violent and revolutionary, this time there is no de-facto a competing superpower in terms of global finances, since China doesn’t seem to be interested at this point to become one.

Bitcoin is a commonly acceptable suitable for all replacement medium of payment and wealth creation implying no conflicts for mere reason of the absence of a physical enemy challenging the existing world order.

Washington Post’s Take

The Washington Post recently wrote that although El Salvador may be some kind of maverick, and Turkey a result of President Recep Tayyip Erdogan’s unorthodox economic policies, Russia has clearly raised the stakes. The biting sanctions imposed on the world’s 11th-biggest economy may be providing a big impetus to cryptoization: Ruble-denominated trading in Tether, a dollar-backed stablecoin, is showing a huge buildup in volumes.

“Before it handed over the dubious mantle of the world’s worst-performing currency to the Russian ruble, the Turkish lira had lost 44% of its value against the dollar in one year. Its purchasing power at home also waned: Depending on whether you believe official statistics or private estimates, inflation in Turkey is anywhere between 54% to 124%. So how did the locals react? For one, the tech-savvy classes went the crypto way.”

Globally, among all the currencies swapped for stablecoins — blockchain tokens that promise 1:1 convertibility into hard assets (mostly U.S. dollars) — the lira’s share jumped to 26% at the end of last year, from 0.3% in January 2020, according to researchers at the Bank for International Settlements. A 26% share is highly unusual, considering that the Turkish currency makes up just 0.5% of the world’s foreign-exchange market.

“The adoption of a crypto asset as the main national currency carries significant risks and is an inadvisable shortcut,” the International Monetary Fund warned in October last year, shortly after El Salvador made Bitcoin legal tender.

Thereafter the WP turns to a truly alarming tone: “Widespread token use would rob banking systems of deposits. Tax revenue may be hit as coin transactions dodge fiscal watchdogs. Less official money means lower seigniorage — the profit the monetary authority earns on assets it purchases by issuing low-cost cash, and cash-like liabilities. Since a central bank can only print the national currency, it can’t fix a shortage of crypto liquidity; financial stability may be jeopardized. By acting as a gateway for capital outflows, digital assets may amplify exchange-rate volatility”.

And even more: “Above all, cryptoization is a risk to the existing financial order, in which it’s the job of banks to deny liquidity and store-of-value services to those that Washington seeks to punish. By operating outside the banking system, coins on decentralized ledgers can weaken America’s policing power. Digital assets, as U.S. President Joe Biden said in his March 9 executive order, may be used “as a tool to circumvent United States and foreign financial sanctions regimes.” They may even avoid scrutiny of centralized exchanges by changing hands in peer-to-peer, or P2P, transactions.”

Credit Suisse’s Take

In a highly repercussive research note by one of the oldest and most respected European banks, Credit Suisse short-term rate strategist Zoltan Pozsar, a former United States Federal Reserve and US Treasury Department official, said the U.S. is in a commodity crisis and this will give rise to a new world order that will weaken the U.S. dollar and create higher inflation in the western world.

Here are the key takeaways from his note titled Bretton Woods III

— We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the euro-dollar system and also contribute to inflationary forces in the West.

— A crisis of commodities is unfolding. Here commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves.

As we outlined above, all references to the changing world financial order unequivocally point to an ongoing explosive adoption of Bitcoin and other crypto currencies.