The Geopolitics of Finance: Beyond the Mirage of De-Dollarization

My recent articles have generated a considerable number of comments and questions about the underlying weaknesses and challenges facing the multipolar world—and specifically the challenges of dollar-alternative financial systems.

What many people find confusing is the difference between payment systems and the financial architecture which underpins the global economy. Payment systems being the visible rails—CIPS, SPFS, bilateral settlement arrangements and the architecture the deeper layer: clearing, custody, derivatives settlement, and reserve management. In this respect, you can change the rails without changing the architecture. What a lot of the internet hype about dedollarization misses is that if you don’t change the architecture, you haven’t changed much.

In this respect, I was privileged to attend a session at the St Petersburg International Economic Forum (SPIEF) in which prominent economists, bankers and economic thinkers discussed at length many of the topics raised in recent articles. I was asked by SPIEF to write a summary report of the discussion, and I decided to reproduce some of the more relevant findings here, partly to answer some of the comments and questions I have received, and partly because it was just genuinely interesting.

The discussion brought together a distinguished group of economists, policymakers, and financial leaders from across the globe:

• Tatiana Valovaya – Director-General of the United Nations Office at Geneva, offering a multilateral perspective on financial reform.
• Zhang Weiwei – Director of the China Institute at Fudan University, providing insight into China’s financial strategy and the rise of multipolarity.
• Michele Geraci – Former Deputy Minister of Economic Development of Italy (2018–2019), offering a critical European perspective on sanctions and de-dollarization.
• Alexander Maslennikov – Deputy Secretary of the Security Council of the Russian Federation, presenting Russia’s view on financial transformation.
• Jeffrey Sachs – President of the UN Sustainable Development Solutions Network and world-renowned economist, joining online to discuss the weaponization of the dollar.
• Sergey Storchak – Senior Banker at VEB.RF, bringing deep experience in international finance and debt management.
• Hans D. G. Hyun – Managing Director of Emerging Asia Capital Partners, offering historical and philosophical perspectives on money and financial architecture.
• Maria Fernanda Espinosa Garces – President of the 73rd session of the United Nations General Assembly, joining online to discuss multilateralism and collective security.

A Systemic Crisis of Trust

The session kicked off with a pretty blunt assessment that no one can argue with: the global financial system is no longer a neutral tool for exchange but a key battleground for geopolitics.

Panellists agreed across the board that freezing Russian sovereign assets and weaponizing SWIFT marked a turning point, eating away at the trust that underpinned the post-Bretton Woods order.

Professor Sachs delivered the most direct assessment: “The United States weaponized the dollar around 20 years ago. This was a big mistake for the United States because ultimately it means a suicide for the U.S. as the reserve currency. Nobody can use the dollar if the dollar is weaponized.”

This observation gets to the heart of what I’ve been writing about recently. The weaponization of the dollar creates the incentive to escape it—but the architecture of that escape contains its own vulnerabilities.

Sachs was scathing about the current U.S. Treasury Secretary:

This is precisely the profile I identified in my earlier analysis of Bessant’s career—an individual whose entire reputation rests on identifying the fatal flaws in sovereign financial systems and applying concentrated pressure until they break.

The Asymmetry Trap: Why De-Dollarization Is Superficial

This is the critical point that many commentators miss.

Payment systems are not the same as financial architecture.

You can invoice trade in yuan. You can settle through CIPS instead of SWIFT. But if the underlying clearing, custody, derivatives settlement, and reserve management still run through dollar-centric systems, you haven’t escaped dollar hegemony. You’ve just layered a multicurrency veneer on top of an unchanged foundation.

The petroyuan is the clearest example. When Saudi Arabia accepts yuan for oil, they get a currency they cannot freely spend in dollar- and euro-dominated global markets. To buy imports from outside China, they eventually have to convert those yuan into dollars. That creates persistent selling pressure on the offshore yuan (CNH) market.

Instead of insulating China, the petroyuan can potentially arm the system it is trying to escape. The offshore yuan becomes a channel for currency pressure, forcing the People’s Bank of China to burn through dollar reserves to defend it. This is not a temporary glitch but structural, as long as dollar dominance in reserves, clearing, and pricing stays largely intact.

Why China Does Not Want to Be the Reserve Currency

Michele Geraci offered a granular analysis of the structural reality. He broke down the three layers of dollar dominance:

1. Means of exchange — you pay in dollars when you buy things
2. Pricing mechanism — oil is priced in dollars, not rupees
3. Reserve currency — central banks hold dollars

His conclusion on the reserve currency layer was stark:

But more importantly, he explained why China does not actually want the yuan to become the world’s reserve currency:

“The yield curve—the interest rate curve—is the mother of all curves. You never, never give this up to some 25-year-old guys in Wall Street with an MBA who pushes a button and changes your yield curve.”

China’s central bank has no interest in surrendering control over its monetary policy to international markets. Becoming the reserve currency means accepting that your currency will be held, traded, and speculated upon by global investors—often in ways that conflict with domestic policy objectives.

This is the fundamental power asymmetry: the country that issues the world’s reserve currency must constantly choose between domestic priorities and global responsibilities. The United States has been struggling with this asymmetry for decades. China has no interest in inheriting the same problem.

Money Is a Weapon—Always Has Been

Hans D. G. Hyun provided some historical and philosophical depth to the discussion.

This reframes the entire discussion: the weaponization of the dollar is not an aberration but a manifestation of money’s inherent nature. The question is not whether money can be weaponized—it always can be. The question is who controls the weapon and how it is regulated.

Hyun drew on Karl Polanyi’s analysis of the pre-WWI gold standard. Finance maintained peace during that period, but only by sacrificing domestic stability. The gold standard required austerity, wage suppression, and labour discipline—conditions he claims eventually fuelled the rise of fascism.

The only difference is that we are relying on the dollar as the hegemonic currency rather than gold, he asserted. But the Triffin dilemma remains, continued Hyun: the United States cannot simultaneously provide global liquidity and maintain domestic industrial competitiveness.

The Bancor Alternative: Keynes’s Unfinished Revolution

Hyun explicitly revived John Maynard Keynes’ proposal for a neutral international reserve currency—the Bancor—as a genuine architectural solution.

The Bancor was not just another digital currency. It was a whole architecture designed to make trade flexible and fluent while remedying the disparities between countries. It was never implemented because the United States insisted on dollar dominance at Bretton Woods.

Hyun noted that scholars at Helsinki University and elsewhere are now producing many articles on how to revive the Keynesian idea under contemporary conditions. He suggested that Russia, sitting outside both US and Chinese blocs, is uniquely placed to initiate a global coalition to build such a system.

The European Dilemma and the Sanctions Boomerang

Geraci offered a critical European angle: asset freezes have cascaded from countries down to individual citizens.

This is especially dangerous in an increasingly digital payments world. How can you survive without a bank account?

He warned that weaponizing finance has undermined basic values like free speech and due process. The sanctions that were supposed to punish Russia have instead created a boomerang effect—they are now undermining trust in the entire Western financial system.

His practical warning to countries holding foreign reserves:

“Be careful as a country where to put your foreign reserves… Yes, you can buy US government bonds, but make sure that the custodian is probably HSBC in Hong Kong and not someone else in Belgium.”

The custody chain matters. The physical location of your assets matters. European and US clearing systems can be politically compromised at any moment.

Infrastructure Shift and Changing Gravity

Zhang Weiwei grounded things in tangible infrastructure. The petrodollar is in decline while the petroyuan and energy financing are going through structural change. He contrasted the outdated, “hostage-prone” SWIFT with China’s CIPS, describing the latter as a blockchain-enabled, highly efficient “brand-new highway.”

Hong Kong is now replacing Switzerland as the top offshore wealth management hub. Taken together, these changes—in energy financing, payment systems, and regulatory oversight—signal the end of unipolarity in international finance.

But Zhang’s vision of a multipolar system—multiple currencies, multiple hubs, multiple coexisting systems—is incomplete without addressing the deeper architecture. Multiple payment rails on top of a single clearing system does not multipolarity make.

The Bessent Factor: A Man Who Destroys Currencies for a Living

It is not coincidental that Scott Bessent now occupies the office of Treasury Secretary.

As I detailed in my previous analysis of the petroyuan trap, Bessent’s career is built on identifying the fatal flaws in sovereign financial systems and applying concentrated pressure until they break. In 1992, he helped short the British pound on Black Wednesday. In 2013, he orchestrated the short against the Japanese yen. He is not a Treasury Secretary who manages the economy; he is a Treasury Secretary who weaponizes finance.

The appointment is precisely what one would expect if the petroyuan trap hypothesis were being implemented. Bessent understands at an operational level how to exploit the asymmetry between payment systems and financial architecture.

The Gold Standard Trap

Hyun’s historical analysis highlighted the fatal flaw of any commodity-backed currency: maintaining the international order requires sacrificing the domestic economy.

A gold standard or any commodity peg requires austerity. Money supply must remain constant. Wages must be suppressed. Labor must be disciplined. These conditions eventually generate social instability and political extremism.

This is the lesson that advocates of a new gold-backed system seem to have forgotten. The gold standard did not maintain peace through prosperity; it maintained peace through suffering. And the suffering eventually ended the peace. An interesting analysis.

Key Takeaways

1. Bretton Woods is dead. The weaponization of the dollar and the freezing of sovereign reserves have permanently eroded trust. This is not a temporary disruption but a structural break.

2. De-dollarization in trade is real; de-dollarization in reserves and clearing is not. The underlying architecture of global finance—derivatives clearing, benchmark pricing, reserve custody—remains overwhelmingly dollar-centric. Changing the payment rails does not change the foundation.

3. The petroyuan is a double-edged sword. China’s ambition to internationalize the yuan through energy trade has created a channel for currency pressure. The system designed to insulate China from dollar hegemony has become an amplifier of vulnerability.

4. China does not want to be the reserve currency. The yield curve is the mother of all curves, and no sensible central bank wants to surrender control over it to Wall Street.

5. Money is inherently a weapon. The weaponization of the dollar is not an aberration; it is a manifestation of money’s nature. The problem is not the dollar per se but who controls it and how the system is regulated.

6. Keynes’s Bancor remains the only real alternative. Replacing one hegemon with another does not change the rules of the game. A genuinely neutral supranational settlement asset would change the game entirely—but there has been very little institutional progress toward it.

7. Russia has a unique role to play. Sitting outside both US and Chinese blocs, Russia can initiate a global coalition for a truly multilateral, non-hegemonic financial architecture.

8. Bessent’s appointment is not coincidental. His career is built on exploiting the very vulnerabilities the petroyuan trap exploits.

9. The gold standard is not a solution. It maintains international order only through domestic sacrifice, and that sacrifice eventually generates the political extremism that ends the order.

10. The fundamental asymmetry remains unresolved. 3.5 billion people live in countries that spend more on interest payments than on healthcare and education. The existing system perpetuates inequality, and the emerging alternatives have not yet addressed this core failure.

Recommendations

The main recommendations that emerged from the discussion are:

1. Speed up development of independent payment systems (SPFS, CIPS, etc.) while acknowledging they remain dependent on the underlying dollar clearing architecture until a truly independent settlement asset is operational.

2. Pass legislative protection for domestic enterprises and individuals against extraterritorial financial sanctions. State-backed legal and financial support systems are essential.

3. Push for multilateral reforms of international financial institutions. Focus on practical “net settlement” frameworks that balance trade surpluses and deficits with diversified currency baskets.

4. Reassess where state reserves are custodied. Diversify away from European and US clearing systems.

5. Commission a comprehensive vulnerability assessment of exposure to offshore yuan (CNH) market dynamics.

6. Actively support academic and policy discussion around Keynesian Bancor-like infrastructure.

7. Develop a clear vision for a reformed international financial system. Without a shared vision, reform efforts will continue to paint the facade rather than address the structural foundations.

In summary: The trap of superficial de-dollarization is real. The path forward requires not just new payment rails but a fundamental rethinking of how global finance is governed—a task that demands both vision and practical, institution-level engagement.

Detailed Biographies

Tatiana Valovaya serves as Director-General of the United Nations Office at Geneva, one of the UN’s most important diplomatic hubs. In this role, she oversees the organization’s work in disarmament, humanitarian affairs, human rights, and economic development. With a background in international economic relations and decades of diplomatic experience, she has been a consistent advocate for reforming global financial institutions to better serve developing countries. She previously held senior positions in the Russian Ministry of Foreign Affairs and has represented Russia in numerous international negotiations.

Zhang Weiwei is Director of the China Institute at Fudan University, one of China’s leading think tanks on international relations and economic policy . A professor of international relations, Zhang is a prominent voice on China’s rise and the emerging multipolar world order. He has written extensively on the China model, comparative politics, and the transformation of global governance. His work has influenced how both Chinese and international audiences understand China’s role in reshaping international financial institutions. He is a frequent speaker at global forums and an advisor to Chinese policymakers on foreign economic strategy.

Michele Geraci is a former Deputy Minister of Economic Development of Italy, serving from 2018 to 2019 . A professor and economist by training, he has lived in China for over 15 years and is deeply familiar with both European and Asian financial systems. He has been a vocal critic of the European Union’s approach to economic policy, sanctions, and relations with Russia, arguing that these policies have undermined European competitiveness and sovereignty . He currently advises international investors on economic policy and global financial trends.

Alexander Maslennikov was appointed Deputy Secretary of the Security Council of the Russian Federation by Presidential Executive Order in March 2025 . The Security Council is a key advisory body to the Russian President on national security and strategic affairs. In this role, Maslennikov oversees economic and financial security issues, including Russia’s response to sanctions, the development of independent financial infrastructure, and strategic partnerships with friendly nations. He brings extensive experience in security policy and economic strategy.

Jeffrey D. Sachs is University Professor and Director of the Center for Sustainable Development at Columbia University, where he held the position of Director of the Earth Institute from 2002 to 2016 . He is President of the UN Sustainable Development Solutions Network and has served as Special Advisor to three United Nations Secretaries-General—Kofi Annan, Ban Ki-moon, and António Guterres . He is a world-renowned economist known for bold strategies to address debt crises, hyperinflation, extreme poverty, and climate change . Sachs is a bestselling author, with three New York Times bestsellers including The End of Poverty (2005). He was twice named among Time magazine’s 100 most influential world leaders and has received 42 honorary doctorates . Prior to joining Columbia, he spent over twenty years as a professor at Harvard University. A native of Detroit, Michigan, he holds B.A., M.A., and Ph.D. degrees from Harvard .

Sergey Storchak is a Senior Banker at the Russian State Development Corporation VEB.RF, where he is responsible for engagement with international organizations, global and regional development banks, and international financial forums . He previously served for 15 years as Deputy Minister of Finance of the Russian Federation, overseeing state policy on public debt, management of state financial assets, and cooperation with the IMF, Multilateral Development Banks, and the G20 . He also held positions as Deputy Chairman of VEB.RF and as a diplomat at the USSR Permanent Mission to the UN in Geneva. He holds a Ph.D. in Economics from the Moscow State Institute of International Relations .

Hans D. G. Hyun is Managing Director of Emerging Asia Capital Partners, a financial firm focused on infrastructure and development finance across Asia. A banker by profession, he has extensive experience financing power plants, roads, ports, and other major infrastructure projects. Beyond his practical banking work, Hyun is a deep thinker on monetary theory and financial history, drawing on thinkers from Max Weber to Karl Polanyi to John Maynard Keynes. He is currently preparing a book on reforming the international financial system and is active in academic forums exploring alternatives to the current dollar-centric order.

Maria Fernanda Espinosa Garces is a former President of the 73rd session of the United Nations General Assembly, serving from 2018 to 2019. A diplomat, linguist, and geographer by training, she has held numerous senior positions, including Minister of Foreign Affairs of Ecuador and Minister of Defense. She has been a consistent advocate for multilateralism, sustainable development, and the reform of international institutions. She is currently a member of the UN Sustainable Development Solutions Network leadership council and continues to advise on global governance issues.