by Summary:
As a reminder, yesterday we reported that Europe has unveiled a "Special Purpose Vehicle" to do just that, which not only would bypass SWIFT, but potentially jeopardize the dollar's reserve status. As we explained, "given U.S. law enforcement’s wide reach, there would still be a risk involved, and European governments may not be able to protect the companies from it. Some firms will be tempted to try the new infrastructure, however, and the public isn't likely to find out if they do. In any case, in response to Trump's aggressive foreign policies and "weaponization" of the dollar, it is worthwhile for Europe, Russia and China to experiment with dollar-free business."… Today, [JPM's head quant, Marko] Kolanovic picks up on this theme and begins with a generic analysis of fund flows, and
Topics:
Mike Norman considers the following as important: de-dollarization, Marko Kolanovic
This could be interesting, too:
As a reminder, yesterday we reported that Europe has unveiled a "Special Purpose Vehicle" to do just that, which not only would bypass SWIFT, but potentially jeopardize the dollar's reserve status. As we explained, "given U.S. law enforcement’s wide reach, there would still be a risk involved, and European governments may not be able to protect the companies from it. Some firms will be tempted to try the new infrastructure, however, and the public isn't likely to find out if they do. In any case, in response to Trump's aggressive foreign policies and "weaponization" of the dollar, it is worthwhile for Europe, Russia and China to experiment with dollar-free business."… Today, [JPM's head quant, Marko] Kolanovic picks up on this theme and begins with a generic analysis of fund flows, and
Topics:
Mike Norman considers the following as important: de-dollarization, Marko Kolanovic
This could be interesting, too:
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As a reminder, yesterday we reported that Europe has unveiled a "Special Purpose Vehicle" to do just that, which not only would bypass SWIFT, but potentially jeopardize the dollar's reserve status. As we explained, "given U.S. law enforcement’s wide reach, there would still be a risk involved, and European governments may not be able to protect the companies from it. Some firms will be tempted to try the new infrastructure, however, and the public isn't likely to find out if they do. In any case, in response to Trump's aggressive foreign policies and "weaponization" of the dollar, it is worthwhile for Europe, Russia and China to experiment with dollar-free business."…
Today, [JPM's head quant, Marko] Kolanovic picks up on this theme and begins with a generic analysis of fund flows, and - in the context of the most successful US "export" - he writes that one can look at the US Trade deficit "as a trade surplus in which the US is acquiring goods in exchange for USD bills." According to the JPM strategist - and many others - this "exchange of natural resources and labor for inherently worthless fiat currency, as well as broad USD ownership has many benefits for the US"….
Hardly groundbreaking, Kolanovic notes that this "exorbitant privilege" was recognized a long time ago by geopolitical rivals - such as China and Russia - that don’t enjoy this benefit. It was also summarized by former NATO secretary general, Javier Solana, who said that "the power of the U.S. today is not military, it’s the dollar."
And, as Kolanovic rhetorically asks, with the current US administration policies of unilateralism, trade wars, and sanctions increasingly affecting both friends and foes, "the question arises whether the rest of the world should diversify away from the risks of the USD and USD-centric finance?"
And this is where the risk emerges, because as Kolanovic expands "recently, there are developments that suggest such a diversification could take place, and is being catalyzed by policies of the current US administration."…
Whether or not buying gold would truly hedge the collapse the US-centric world, a process which would entail the ascent of either the Euro or the Yuan to the status of global reserve currency, and one which the US would not allow to happen without a major war, is debatable. However, what is most remarkable is that we now have reputable bankers in the face of none other than Marko Kolanovic, one of the most respected strategists at JPMorgan, contemplating a world in which the US Dollar is no longer the reserve currency, a "thought experiment" which until recently was relegated to the fringes of financial commentary. That this line of thinking is becoming increasingly more mainstream - and accepted - is perhaps the most troubling observation from Kolanovic's latest note...Actually, it's not so much historical "extraordinary privilege" as contemporary control of the global financial system, giving the US ability to conduct economic and financial hybrid warfare against those countries that resist following the rules that the US makes or refuse to kowtow to US leadership.
Zero Hedge
Kolanovic: There Is A "Profound" Danger To The Dollar's Reserve Status
Tyler Durden