For two parties to transact in dollars they need either to physically hold large amounts of dollars. Or have access to some shared ledger that is accounting system where transactions can happen.
Say A, B, C account. A sells gold and get dollars from account B to account A. And now they can buy oil from owner of account C.
But who owns and runs these accounts or the transactions between them? One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted. Value of dollars there are very unlikely to be good for long term. And same applies to any accounts in banks in western influence sphere.
Thus directly transacting is better option in long run. For any country that wants to keep their economy stable.
> One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted.
That is quite a leap. Russia was also excluded from the NY stock exchange due to the ongoing sanctions; does that mean we can no longer trust stocks bought and sold there?
Yes, it does at least for those of us who are not US citizens. You can never be sure that one day the US won't sanction your home country in the same way, for some weird reason. Of course for some countries the risk is greater than for others, but still, it's a good reason to avoid US financial markets.
All financial markets participate in sanctions, so taking this absolute stance would limit the negotiable instruments available to you to briefcases full of gold or cryptocurrency.
You're using the law of averages. Not all financial markets participate in the same sanctions to the same extent at the same time, which means that the decision about where to invest can be important.
> taking this absolute stance
You're the one characterizing this as an absolute stance, rather than a practical stance related to the current condition of the markets of the most powerful country that demands the most sanctions.
No, GP claimed that enforcement of any sanctions in international transfers means that the whole system can’t be trusted.
> You're the one characterizing this as an absolute stance, rather than a practical stance related to the current condition of the markets of the most powerful country that demands the most sanctions.
The original argument I was responding to claimed that one could not use financial institutions that participate in SWIFT. If you want to claim that’s a moderate, reasoned position, then ¯\_(ツ)_/¯
Putting your entire economy at risk of being turned off advisory due to unknown future political disputes is a risk to the sovereignty of nearly every country in the world. Many countries are now looking for alternatives after the neutrality of swift/the dollar was eliminated.
Say A, B, C account. A sells gold and get dollars from account B to account A. And now they can buy oil from owner of account C.
But who owns and runs these accounts or the transactions between them? One option is SWIFT system. Which Russia got excluded in some capacity from. As such it is clear that system cannot be trusted. Value of dollars there are very unlikely to be good for long term. And same applies to any accounts in banks in western influence sphere.
Thus directly transacting is better option in long run. For any country that wants to keep their economy stable.