Beyond Dollar Dominance: New money and payment systems for a multipolar world

The global economy is facing multiple systemic challenges and geopolitical uncertainties. This includes energy and inflationary shocks, climate and ecological breakdown, growing inequality, the prospect of new tariff and trade wars, and conflicts arising from deeply extractive economic models. The most damaging impacts of all these crises are falling disproportionately on those that are least responsible for them in the Global South. 

 The dollar-centric International Monetary and Financial System (IMFS) entrenches global inequalities, debt crises, and drives ecological harm. Sitting at the heart of the IMFS is a strict hierarchy of currencies - with the dollar at the top followed by a few major Global North currencies- this upholds the global inequalities we see today, and causes money to flow in the wrong direction, from poor to rich, and the Global South to the Global North. But there is an alternative. 

New payment systems paired with Central Bank Digital Currencies (CBDCs) offer alternative financial infrastructure to reduce dependency on the Global North dominated IMFS. If designed well, these innovations can overcome the limitations of the existing outdated, centralised payment structures and facilitate local currency trade for crossborder payments. Strengthening Global South-led multilateral development banks and South-South financing initiatives will help build a more multipolar financial architecture to reclaim the monetary policy space and enable countries to prioritise their long-term development and climate goals. 

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(Free, PDF, 48 pages)

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