Countries from Russia to China are building payments systems that could threaten the dollar’s global dominance

The Brookings researchers wrote that these CBDCs could “upend the dollar’s role as a currency ‘middleman’ by reducing settlement times, making it cheaper and easier to trade non-dollar currencies.”

The CBDCs integrate messaging and payments, unlike current systems like SWIFT and major US dollar clearing system CHIPS.

Russia rushes into crypto

As doors to transact in fiat money close, Russia is now looking to trade in cryptocurrencies.

It’s in such a rush to get the system up and running that it plans to start crypto exchange trials as soon as September 1, anonymous sources told Bloomberg in late August.

Creating this mode of payment has gotten more pressing because even banks from China are rejecting most transactions with Russian entities.

Russian President Vladimir Putin himself said in July that Russia had to “seize the moment” to create a legal framework for digital assets, as they are being increasingly used to settle international payments.

Going back to barter trade

If all else fails, there’s also the age-old method of barter trade.

In August, Reuters reported that Russia and China are planning to revive the practice of barter trade to get around Western sanctions.

The deals could involve agriculture and could come as soon as this fall, the news agency reported, citing anonymous trade and payments sources.

The two countries are no strangers to barter.

It was practiced during the Soviet era and in the years following the bloc’s collapse. At the time, China was a key trading partner.

In August 2022, the Taliban regime in Afghanistan also discussed barter trade with Russia that could involve trading Russian crude oil products in exchange for raisins, minerals, and medicinal herbs, according to RIA Novosti, a Russian state-owned news agency.

Last year, cash-strapped Pakistan authorized the barter trade of specific goods with Russia.

In 2019, China traded $150 million worth of palm oil from Malaysia for a range of products and services, including natural resources and defense equipment.