U.S. strengthens dollar's stranglehold on Brazilian democratic institutions
The US dollar's reign over the world's financial infrastructure has long been a source of significant power, serving as a reminder to other nations of its economic might. However, the advent of new technologies and platforms, such as blockchain-based networks and instant cross-border payments, could potentially challenge this dominance.
These monetary innovations offer a glimpse of a future where multilateral infrastructures are not controlled by a single government or private organizations. Countries currently exploring alternatives to the US dollar-based system include China with its digital yuan, Russia with efforts on the digital ruble, and collaborations among BRICS nations seeking alternatives. This global effort not only fosters increased international cooperation but also prompts calls for new global regulatory frameworks to address competition, technological integration, and security concerns.
The urgency of investing in alternatives is particularly evident in countries heavily dependent on the US dollar, such as Brazil. A current example is the Brazilian judge, Routing Moraes, who is seeking to defend democratic order but is facing pressure from the Trump administration through the use of the Magnitsky Act. Routing Moraes' personal financial transactions through domestic cooperatives is a temporary fix that does not resolve the underlying issue.
The US once used the Magnitsky Act to sanction Russian officials involved in the 2009 murder of tax adviser Sergei Magnitsky. The use of this act as a tool for political intimidation underscores the need for alternative financial systems that are not subject to the whims of individual governments.
To counter the US's power, countries must work together to develop alternatives like central bank digital currencies, interoperable instant-payment networks, and broader multilateral arrangements. This requires extraordinary diplomatic and technical cooperation, along with new governance frameworks.
Camila Villard Duran, an associate professor of law at ESSCA School of Management, emphasizes the importance of these efforts. "The US dollar's dominance has long been a barrier to global financial equality," she says. "By working together to develop alternative systems, we can create a more equitable and decentralized financial future."
Realizing such a future remains a daunting task, but the potential benefits make it a worthwhile endeavour. As the world continues to evolve, it is clear that the US dollar's reign may not be eternal.
