New Global Monetary System Will Evolve, as Sanctions and Current Conventions Worsen Supply Shortages
345 Views, 07 May 2022 18:31
- Seizure of Russia's external assets is prompting countries to think about protecting economic security via alternative payment mechanisms for commodities. The dollar's role as the leading reserve currency remains intact.
- Foreign exchange reserve management could change following seizure of Russian assets. Politicisation of SWIFT could impact flows into banking systems due to fears of potential seizures without legal recourse.
- High transaction costs for foreign trade never featured prominently during the globalisation era. New lockdowns in China and Russian sanctions accentuate supply shortages and inflation under current global monetary arrangements.