Iran will propose a cryptocurrency to Europe in order to bypass American sanctions
The United States continues to accumulate sanctions against the rest of the world. Russia, China, Europe, Iran – everyone is on the receiving end of serious attacks. American diplomacy: first, they crush you under their boot,then they engage in diplomacy.
Uncle Sam has exceeded the limits by torpedoing the Iranian nuclear deal
This is what is suggested in the recent statements by the German Foreign Minister who called for the creation of a new international payment system.
This may not sound amazing, but it is actually a death threat that Germany just sent to the US empire, as its power comes largely from the fact that the Dollar has been the international currency since the end of the second world war.
It is an « exorbitant privilege » that the United States has managed to preserve by forcing all oil-producing countries to trade only in Dollars. In 1973 President Nixon indeed managed to convince Saudi Arabia to sell its oil in dollars. Since then the greenback has prevailed over some other currencies which are widely accepted around the world such as the Euro, the Yen or the British Pound.
But it has to be noted that the strength of the Dollar is crumbling. It accounted for 80% of international transactions on the SWIFT network in 2012 but no more than 38% in 2018 … This is still a lot, especially compared to the Chinese Yuan for example.
This chart breaks down international trade by category. You can see that oil share was very heavy in the 1970s, when Americans betrayed the world by shattering the Bretton Woods system (the international monetary system from 1944 to 1971). It ended when Nixon decided to remove the convertibility of the dollar into gold. The world then had no choice but to continue using the Dollar with the full knowledge that the Americans are printing money behind their backs. As a result, the world is using a currency whose value continues to decline, which should not be allowed for an international currency.
Not for long apparently. Iran is now at the center of a battle of geopolitical and monetary titans.
Europe has turned a blind eye to US monetary imperialism for too long
Recall that just two years after deciding to sell its oil in EUROS, Iraq was razed by the Americans before our eyes and despite the veto of former French foreign minister Dominique de Villepin. (1,000,000 Iraqis were killed in this war.) The first American initiative after taking Baghdad was to switch back the oil sales in Dollars…
In the end, all the oil sold in Dollars belongs to the United States, since they can buy it by printing as much paper money as they want… Europe accepted this situation as long as the Euro kept its high position in the concert of international currencies.
But Donald Trump has gone too far in threatening Germany with a 25% tariff barrier on its car exports (Mercedes, Audi, BMW, Volkswagen) in order to force Europe to cease all trade with Iran. The not so secret goal: the US must protect the PetroDollar if it wants to continue to have free meals. Indeed, the Islamic Republic has decided not to sell its oil in Dollars. If nations continue to drop the Dollar, America will understand what it means to pay its bills. It might get bloody – 45 millions americans are already on food stamps…
Bad luck that Angela Merkel, who is probably serving her last term, is no longer in the mood to be dumped on. She seems to be ready to fight back by torpedoing the Dollar, if the United States continues with their embargo on Iran.
The United States will probably again disconnect Iran from the SWIFT system(a payment system through which all international transactions have to pass). For that reason Germany argues for the creation of a European IMF and a European SWIFT, because dealing with Iran in Dollars will expose it to fines, and that Iran will be disconnected from the international SWIFT network at the request of the United States.
The Dollar is a privilege and a formidable weapon … Here is our article on the matter: « The Dollar is a weapon »
A cryptocurrency to bypass the SWIFT network?
A payment system based on a Cryptocurrency is being actively explored by Iran.
Indeed, the advantage of a cryptocurrency is not simply to be a great store of value. A cryptocurrency is also a payment system in its own right. Two in one !
Unfortunately, Iran does not seem to be interested in Bitcoin since Iran’s national center for cyberspace has just revealed that it has completed the first draft of a national cryptocurrency …
By the wy, note that the Iranian central bank must give its opinion on cryptocurrencies next month and that for the time being, banks are not allowed to deal with cryptocurrency exchanges.
Iran, in our view, is wrong because even though Europe seems kind to Washington, it also has its own geopolitical and monetary calculations. The Euro Zone will want to buy Iranian oil in Euros and not in « crypto-Rial », even if this cryptocurrency has the advantage of bypassing the SWIFT network.
On the other hand, Iran could be more successful by selling its oil in Bitcoin for two main reasons:
– Bitcoin is totally decentralized. It is stateless and therefore no country can use it to his advantage. A notable difference with the Dollar since the United States can prohibit any country to use it … Iran does not have a splendid reputation and it would surely be better to choose a stateless currency because many countries would hesitate to give too much monetary power to the Islamic Republic.
-Bitcoin is a great store of value unlike the Dollar whose value has decreased by 99% since its creation. On the contrary, there will never be more than 21,000,000 Bitcoins. Thus, exporting countries, instead of having foreign exchange reserves in « inflation-eroded dollars », will have reserves whose value will steadily grow until it stabilizes when Bitcoin has been adopted by most countries. In other words, the first countries that will use Bitcoin will benefit the most …
In short, a cryptocurrency issued by a state can only pale into insignificance compared to Bitcoin because a state is always tempted to print more money. Being Stateless is one of the biggest advantage of Bitcoin.
BTC : 1Crsj83gGx7iGGNhSyYedxX7y5Jqo5gKbA
ETH : 0xe7110Aee7923d42F7AbF975bAF94b962e8c8e30F