Yet even holding dollars as a monetary reserve to protect one's own currency could be short lived as the rise of sovereign cryptocurrencies, coupled with talk of a return to some form of a gold standard in bi-lateral trade, may one day even make holding dollars simply obsolete.
The European Union is considering switching payments from the US dollar to the euro after Washington threatened to target European firms working in Iran, according to reports. The measure may help the EU to retain one of the world's largest markets, which was opened for trade after the historic nuclear deal signed by Tehran and the P5+1 powers (China, France, Russia, UK, US, plus Germany) in June 2015.
The idea to eliminate the role of the greenback in international settlements is not new. Aside from the EU, a number of nations have been mulling the idea. RT discussed with analysts how realistic the prospect of countries ditching the dollar is. At the same time, analysts admit that getting rid of the greenback is not an easy task. It took the US dollar nearly a century to unsettle the British pound that had been enjoying its preeminence through the 19th century and the first half of the 20th as the global reserve currency.
"Old habits are hard to break as most of the global hedging is still done on US exchanges like Nymex or ICE," Innes said. "The issues are working out the deliverable to hedge ratio factors which could put many off from breaking long-held settlement in US dollar.""The US dollar is still, for many reasons, the international trade and reserve currency of choice," according to Kateb. "The whole international financial system is currently structured around the United States and around the central role of the dollar." – Russia Today
Back when the dollar and the SWIFT system were at their height of their power, the use of economic sanctions was a devastating weapon the U.S. or United Nations could implement to push (force) a particular government or economy to have to fall back in line with the guidelines of U.S. and international hegemony.
However the second decade of the 21st century has seen a paradigm shift where there are now several different avenues in which individuals, nations, and even coalitions can use to bypass imposed sanctions and make that financial weapon almost obsolete. And one of these avenues is the advent of cryptocurrencies.
And as the U.S. begins plans to re-institute new economic sanctions on Iran following President Trump's 'tearing up' of the Iran Deal, there are now growing discussions between Russia and the Middle Eastern oil power to conduct trade through cryptos should Washington once again decide cut off Iran from the SWIFT system.
Should this potential trade agreement come to pass, it would be the second real use of cryptos (after Venezuela and Russia) in both international trade, and inter-bank settlement. And a successful outcome from this could then quickly see the rest of the world rush headlong towards creating their own sovereign cryptocurrencies as a replacement for currencies tied to the SWIFT system, and invariably put a dagger in the heart of the dollar's control over the global monetary system.
Mohammad Reza Pourebrahimi, the head of the Iranian Parliamentary Commission for Economic Affairs, referred to cryptocurrencies as a promising way for both countries to avoid US dollar transactions, as well as a possible replacement of the SWIFT interbank payment system.
At a meeting with Dmitry Mezentsev, the Chair of the Federation Council Committee on Economic Policy, Pourebrahimi said that they have “engaged the Central Bank of Iran to start developing proposals for the use of cryptocurrency.”
Pourebrahimi added that he discussed this topic in the State Duma's Committee on Economic Policy the day before and that Iran had established cooperation with Russia on this issue:
“They [Russia] share our opinion. We said that if we manage to move this work forward, then we will be the first countries that use cryptocurrency in the exchange of goods.” – Coin Telegraph