Weaponisation of Money and Payments

Rosa M. Lastra

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Chapter 4 Weaponisation of Money and Payments

In: International Sanctions: Monetary and Financial Law Perspectives

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Rosa M. Lastra

Rosa M. Lastra
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Type:: Chapter

Pages:: 102–122

DOI:: https://doi.org/10.1163/9789004705708_006

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Abstract

The US Dollar acts as an anchor in international monetary relations and enjoys ‘an exorbitant privilege’, in the words of the late Valéry Giscard D’Estaing. However, unilateral sanctions, the weaponization of money and payments, will likely dilute the dominance of the US Dollar and result in further diversification of central bank reserve assets and a more fragmented international monetary system. SWIFT, though founded as an international cooperative under Belgian law, enjoys a de facto global monopoly in payments. But sanctions incentivise some countries to make their payments outside SWIFT. Indeed, following the annexation of Crimea, Russia started working on an alternative to SWIFT, called SPFS and several countries were approached to join this SPFS network, including Belarus, Kazakhstan, Turkey and Iran. China has developed a Cross Border Interbank Payment System (CIPS) as an alternative to SWIFT and the arrival of the DCEP (Digital Currency Electronic Payment), the digital version of the renminbi (e-RMB) is a step in the direction of its increased international use, challenging the d0minance of the US Dollar in the digital age. China is already promoting the use of DCEP in Africa. A parallel monetary and payment system is emerging. Sanctions also encourage the emergence of small currency blocs based on trade between countries such as Russia, China, Saudi Arabia, India.

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International Sanctions: Monetary and Financial Law Perspectives

E-Book ISBN:: 9789004705708

Publisher:: Brill | Nijhoff

Print Publication Date:: 19 Jul 2024

Subjects
- Human Rights and Humanitarian Law
  - Human Rights
- International Law
  - International Commercial, Trade & Investment Law

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Chapter 4 Weaponisation of Money and Payments

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International Sanctions: Monetary and Financial Law Perspectives

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