Global banks are developing a secret weapon: The dollar's hegemony is about to end

Currently, most international financial transactions must pass through the network of customer accounts in the U.S. banking system. This gives the U.S. government enormous power, power that it has not used in the past few years.

Everything happened so fast.

Yesterday, 15 Japanese banks signed an agreement to adopt new financial technologies to clear and settle international financial transactions.

This is a huge step.

Currently, most international financial transactions must pass through the network of customer accounts in the U.S. banking system. This gives the U.S. government enormous power, power that it has not used in the past few years.

The first watershed year was 2014. The Obama administration fined BNP Paribas $9 billion for providing services to Cuba and Iran, which were sanctioned by the United States. The penalty for BNP Paribas had nothing to do with whether it had violated French law.

Obviously, this has nothing to do with the subsequent historic nuclear agreement between the United States and Iran and the normalization of diplomacy between the United States and Cuba.

BNP Paribas had to pay a fine, a French bank was fined $9 billion for violating U.S. law. $9 billion is a huge number, but it is better than being kicked out of the U.S. banking system. Without access to the U.S. banking system, the world's big banks will not be able to operate.

As long as the U.S. dollar remains the world’s reserve currency, if the world’s major banks still want to remain operational, they must clear and settle transactions in U.S. dollars. This means that the world’s major banks must have access to the U.S. banking system and hold U.S. dollars.

But after seeing BNP Paribas being fined $9 billion by the US government, other major banks around the world know that they could be next. So major banks around the world began to make contingency plans. Blockchain technology provides an excellent solution.

Compared to the inefficiency and high cost of transferring funds through the U.S. banking system, data link technology provides a simpler direct payment method.

I couldn't understand how important this technology was.

Blockchain technology will also have the potential to dismantle the U.S. government’s control over the global financial system. Despite the tremendous efforts in this direction, even I am surprised at the development of this trend.

Today, four of the world’s largest banks announced a new joint venture to develop new financial settlement protocols based on blockchain technology. Deutsche Bank, UBS, Santander and Bank of New York Mellon announced that they will jointly develop a “multi-purpose settlement currency”.

Similar to other competing technologies such as Ripple, Settlecoin, Monetascoin, etc., the multi-purpose settlement currency has the potential to end reliance on the U.S. banking system for cross-border payments and financial transactions.

Foreign banks will be able to make payments directly, without having to go through the Wall Street banking system.

(Global information company Oliver Wyman estimates that the cost of clearing and settling international financial transactions is as high as $80 billion per year).

This will have a huge impact, especially on US banks.

For example, the Federal Reserve has warned that new financial technologies pose risks to the security and stability of the U.S. financial system.

The Fed is right.

If foreign banks can make payments directly without going through the U.S. banking system, do they still need to keep trillions of dollars in the United States?

Obviously, the answer is no.

If this technology is adopted, foreign banks will withdraw huge amounts of deposits from the U.S. banking system.

American banks will suffer a huge blow. In addition, there will be fewer countries willing to buy US Treasury bonds.

This technology will be a game-changer and will have a huge impact, and it will happen very quickly. If these big banks can finally succeed, this new technology will be commercially available in 18 months.

Remember this date, for it may be the end of America's peak financial dominance. (OsCAr)