The End of Dollar Dominance: Project mBridge and the New World Financial Order
Adrian C. Spitters, CFP?
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How Central Banks Are Redefining Global Currency Systems and the Role of Gold in the Post-Dollar Era
Global financial dynamics are undergoing a rapid transformation, driven by shifting alliances, evolving technologies, and the quiet reassertion of gold as a foundational asset. At the forefront of this change is Project mBridge, a cross-border, decentralized platform for digital currency exchange that may represent the first significant blow to the U.S. dollar's longstanding dominance in global trade. Backed by China, Hong Kong, Thailand, and the UAE and endorsed by the Bank for International Settlements (BIS), Project mBridge is reshaping how nations conduct international transactions. Most significantly, it does so without the involvement of the U.S. dollar, leaving investors and financial institutions to reevaluate the global landscape.
Project mBridge: A Digital Platform Redefining Global Trade
Project mBridge is a decentralized platform enabling Central Bank Digital Currencies (CBDCs) to be traded directly between nations. Unlike the existing global financial system, which relies heavily on the U.S. dollar and the SWIFT network for settlements, mBridge is built to bypass these traditional systems. By doing so, countries can transact in their native digital currencies, free from the oversight of Western intermediaries.
The platform's participants include China, Hong Kong, Thailand, and the UAE, with 25 additional countries acting as observers. Saudi Arabia, the largest oil exporter globally, recently became a full participant, signalling a critical shift in how oil transactions may soon be settled. As more countries engage with mBridge, the U.S. dollar's role in international trade, particularly in oil, diminishes.
This development is more than just a technological innovation; it is a strategic realignment that could upend decades of dollar-centric global trade. With no reliance on SWIFT, the platform effectively creates an alternative global financial ecosystem that the U.S. cannot control or sanction. This exclusion of the dollar from key international transactions is a direct threat to its status as the world’s reserve currency.
Saudi Arabia and the Implications for Global Oil Trade
The significance of Saudi Arabia’s participation in Project mBridge cannot be overstated. For over 50 years, the U.S. dollar has dominated global oil trade, a system often referred to as the "petrodollar" standard. This arrangement began in the 1970s, ensuring that oil transactions were exclusively priced in U.S. dollars, cementing the currency's position as the world's reserve. This gave the U.S. extraordinary economic influence, as countries needed U.S. dollars to buy oil, creating consistent demand for U.S. assets and debt.
Saudi Arabia's move to join Project mBridge suggests a potential end to this arrangement. The exclusion of the U.S. dollar from mBridge means that oil, one of the most traded commodities globally, could soon be priced and traded in other currencies, specifically central bank digital currencies and, more importantly, in gold.
The Role of Gold: Remonetization in a New Era
Gold, once the backbone of global currency systems, is making a resurgence in international trade, and central banks are positioning themselves accordingly. Over the last few years, central banks worldwide have been accumulating gold at unprecedented rates, quietly repatriating reserves stored in foreign vaults.
In 2023, China and the UAE conducted test trades of gold and oil using digital currencies over Project mBridge. These trades worked flawlessly, demonstrating that gold and oil, the two most critical commodities, are being remonetized in global trade. While the U.S. dollar remains outside of this system, gold is quickly becoming a key element in trade settlement between nations.
Since 2017, a significant number of central banks have repatriated their gold from Western vaults, particularly from the New York Federal Reserve and the Bank of England. Countries like Germany, Austria, Saudi Arabia, India, and Turkey have increased their gold holdings and brought their reserves back home. This trend, often justified by geopolitical instability or fears of Western sanctions, is about more than just diversification; it's about preparing for a future where gold plays a pivotal role in the international financial system.
The BIS itself reclassified gold as a Tier 1 asset in 2019, placing it on equal footing with the U.S. dollar and government bonds as the highest quality form of collateral in the global financial system. This reclassification has likely fueled the massive surge in central bank gold purchases. For many countries, particularly those outside of the West, holding gold is seen as a way to safeguard against potential dollar-based risks, including sanctions, inflation, or devaluation.
The Unit: A New Settlement Currency Backed by Gold and Local Currencies
At the heart of Project mBridge's long-term vision is a new settlement currency, currently known as the "Unit." This proposed digital currency will be backed by 40% gold and 60% BRICS-plus local currencies. The Unit would act as a mbridge currency for international transactions, allowing countries to settle trade balances without relying on the U.S. dollar. This system ensures that each participating country maintains monetary autonomy while contributing to a shared settlement framework.
The gold used to back the Unit will not be centralized in one location; instead, each country will hold its gold reserves within its borders in escrow accounts, audited independently. This setup minimizes counterparty risk, cuts out the need for Western banks, and gives nations greater control over their monetary systems.
The 60% backing by BRICS-plus local currencies introduces a diversified basket approach to the Unit, further decreasing dependence on any single currency, especially the U.S. dollar. The Unit’s structure offers flexibility for countries like Russia and China, which are likely to back their local currencies with gold to increase their weight within the 60% basket. This arrangement allows each nation to maintain sovereignty over its monetary policy while still participating in global trade without needing the U.S. dollar.
Implications for the U.S. Dollar and Global Trade
As countries increasingly adopt the Unit and Project mBridge and become more established, the demand for U.S. dollars and U.S. Treasury securities will inevitably decline. The U.S. dollar’s status as the world's reserve currency has been built on its role in global trade, especially in oil. However, as more countries conduct transactions in gold-backed digital currencies or local currencies, the need for dollar reserves diminishes.
This shift could have profound effects on the U.S. economy. For decades, the U.S. has been able to run large budgets and trade deficits because other nations needed U.S. dollars for trade, particularly for oil. If the world moves away from the dollar in favour of the Unit, the U.S. could face significant challenges in financing its deficits and maintaining economic stability.
More importantly, the ability of the U.S. to impose financial sanctions on other countries—a key tool of its foreign policy will be severely weakened. Project mBridge, by excluding the dollar and bypassing SWIFT, creates a system where nations can conduct trade and store wealth without U.S. oversight. This decentralization of global trade removes much of the leverage the U.S. has enjoyed over the past 50 years.
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Building a Stronger Portfolio: Why Gold Should Be the Foundation of Your Wealth
Given the massive changes occurring in global trade and financial systems, gold should be viewed as the cornerstone of any robust, diversified portfolio. As central banks and nations realign themselves, individual investors must take similar steps to safeguard their wealth. Here’s why gold, in particular, stands out:
The Stability and Reliability of Gold
Gold’s long-standing reputation as a stable, reliable asset is precisely what makes it so crucial in today’s uncertain financial environment. Unlike paper assets that can lose value rapidly during market downturns, gold tends to retain or even increase in value during economic instability. As a tangible asset, it is not subject to the same vulnerabilities as securities or digital assets, making it a safe haven for wealth preservation.
When financial markets become volatile, or inflation erodes the value of currencies, gold remains a steadfast store of value. This makes gold not only a hedge against inflation but also a form of insurance against broader systemic risks.
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Gold as Portfolio Insurance
Gold’s role as a buffer against the volatility of traditional investments, like stocks and bonds, cannot be overstated. Its ability to appreciate when other assets are losing value makes it a natural hedge against market downturns. By holding a portion of your wealth in physical gold, you can offset losses elsewhere in your portfolio, ensuring that your overall wealth remains protected during uncertain times.
For those interested in acquiring physical precious metals, contact New World Precious Metals to explore purchasing options and build your financial defences.
A Partnership for Holistic Wealth Management
De-risking wealth requires more than just investing in gold; it demands a strategic approach that includes a variety of alternative assets. As a dedicated advocate for protecting business, family, and multi-generational wealth, my team is partnered with one of Canada’s leading independent private wealth management firms. Together, we offer sophisticated strategies traditionally reserved for the ultra-affluent.
Our fiduciary-focused, client-first approach provides high-net-worth clients across Canada access to a comprehensive range of wealth management services, including tax-advantaged solutions, private equity, and private real estate investments. By partnering with our wealth management team, you can build a resilient, diversified portfolio designed to weather economic uncertainty and inflationary pressures.
Capital Preservation First: Protecting Your Assets
At the heart of our philosophy is a “capital preservation first” approach, emphasizing consistent, tax-efficient returns that are uncorrelated to public markets. Through our team’s expertise, you gain exclusive access to alternative investments such as private equity, private real estate, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions offered through mutual life companies.
These strategies are designed to de-risk your portfolio, ensuring that your wealth is protected from financial institution risk, economic threats, and higher taxes. Our holistic approach offers the peace of mind that comes with knowing your family, business, and estate are secure.
To receive a complimentary digital copy of "Who's Investing Your Money?," email me at [email protected] or book a complementary portfolio evaluation with me through my Calendly Link.
Complimentary Portfolio Evaluation: Take the First Step Towards a Secure Financial Future
As a valued reader, I am offering a complimentary portfolio evaluation to discuss how alternative assets such as gold, private equity, private real estate, and tax-minimizing corporate insurance solutions can fortify and de-risk your portfolio. To book your consultation, email me at [email protected] or use my Calendly Link.
The Custodial Model: An Additional Layer of Protection
In light of the revelations in David Rogers Webb's book The Great Taking, to further safeguard wealth, the firms I work with employ a custodial model, where client assets are held securely by an independent third-party custodian rather than commingled with the firm's assets. This crucial segregation of assets provides an additional layer of protection, reducing the risk of seizure or misappropriation in a financial crisis or institutional insolvency. The custodial model offers investors a safeguarded solution to help secure their wealth separately from the investment management firm.
Watch The Great Taking Documentary
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Disclaimer
The information provided is for educational purposes only and does not constitute financial, investment, legal, real estate, estate planning, wealth planning, financial planning, tax planning, insurance, or any other financial-related advice. It should not be viewed as a recommendation to buy, sell, or hold any financial products or assets. All investments, including stocks, bonds, private equity, private real estate, alternative assets, and precious metals, carry inherent risks, including loss of principal. Markets are unpredictable, and past performance does not guarantee future results. Diversification may reduce risk but does not ensure protection against loss. Real estate and precious metals are subject to market volatility, economic conditions, and illiquidity. Alternative investments, such as private equity, private real estate, and private debt, often involve complex legal structures, longer time horizons, and higher risk, requiring careful consideration and professional advice. Insurance, estate planning, wealth planning, real estate, and tax planning decisions, as well as any financial strategies, must be tailored to the unique circumstances, goals, and risk tolerance of each individual. Tax and legal implications vary by person and jurisdiction, and changes in laws can affect outcomes. It is crucial to consult with licensed financial, legal, tax, insurance, real estate, and mortgage professionals before making decisions. Forward-looking predictions are the opinion of the author and do not constitute financial advice. By using this information, you acknowledge it is general in nature and not a substitute for personalized advice, and you agree that the authors and affiliated entities are not liable for any financial losses or consequences from reliance on the content provided.
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