By Owen Halberg
For decades, the U.S. dollar has served as the backbone of global commerce — the unit of account for oil, trade, and debt. Yet in the shadow of intensifying sanctions regimes, a parallel architecture is emerging. From Moscow to Tehran to Beijing, nations sidelined from the dollar system are stitching together alternatives: bilateral currency swaps, crypto-based settlements, and state-backed digital coins. What was once fringe experimentation is hardening into shadow currencies — and with them, the outlines of new financial empires.
The Weaponization of Money
Sanctions have always had unintended consequences. When Washington freezes access to SWIFT, bars dollar clearing, or blocks foreign reserves, it signals financial might. But overuse erodes trust. In 2022, the freezing of Russia’s central bank assets shocked governments worldwide; if it could happen to a G20 economy, it could happen to anyone. Central bankers began asking: what alternatives exist if the dollar becomes a tool of coercion rather than a neutral medium?
The answer, increasingly, is to build systems that bypass it altogether.
Parallel Networks Taking Shape
China’s Cross-Border Interbank Payment System (CIPS) is one such alternative, allowing yuan-based settlements without routing through New York. Russia has pushed its own SPFS network as a domestic replacement for SWIFT. Meanwhile, sanctioned states from Venezuela to Iran experiment with cryptocurrencies and barter-like arrangements, trading oil for goods through opaque intermediaries.
None of these systems match the dollar’s liquidity or trust. But they don’t need to — they only need to function for those locked out. For sanctioned economies, partial connectivity beats isolation. For allies wary of overdependence on the U.S., they offer a hedge.
The Empire of Alternatives
History suggests that financial empires rise not only through strength but through necessity. The British pound once held sway until wars and debts eroded its dominance. Today, the dollar remains unrivaled in depth and credibility. But the scaffolding of alternatives signals a creeping pluralism.
Consider gold purchases by central banks: at their highest levels in decades, a clear bid to diversify away from U.S. assets. Or the BRICS bloc’s discussions of a shared currency framework. Each development alone seems marginal. Together, they sketch a world where multiple orbits of finance coexist — and where sanctions accelerate the shift rather than deter it.
Risks for the Global Order
For the U.S., the danger is not immediate collapse but gradual dilution. A world of shadow currencies complicates enforcement, weakens leverage, and fragments monetary stability. For smaller economies, the risk is entanglement: being drawn into opaque systems with little transparency or recourse.
The dollar’s primacy has long underpinned not just markets but geopolitics, granting Washington unparalleled reach. The rise of shadow currencies does not end that empire, but it does reveal its limits. The very tools designed to project power may be sowing the seeds of a multipolar monetary order.
