From SWIFT to CIPS: Has the World Begun Building a New Financial Order?
By Prof. Khalid Wassef Al-Wazani
Professor of Economics and Public Policy
Mohammed Bin Rashid School of Government
In several previous articles, I argued that the world was steadily moving toward a new global financial order, one that rejects dependence on a single dominant power, a single reserve currency, and a single financial settlement system represented by SWIFT. At the time, most forecasts suggested that such a transformation would gradually emerge during the next decade. Yet current geopolitical developments indicate that the birth of this new financial order may be arriving far sooner than expected. Strategic tensions, and perhaps miscalculations among major powers, have accelerated the transition. The global financial system is no longer perceived as a neutral framework for facilitating trade and international settlements. Over recent years, it has increasingly become one of the most powerful instruments of geopolitical influence.
From economic sanctions and the freezing of sovereign assets to restrictions on international transfers, states now recognize that control over the global financial system is as strategically important as control over energy resources, technology, or trade corridors. Against this backdrop, China has moved steadily and rapidly toward promoting an alternative international payment system known as CIPS, the Cross-Border Interbank Payment System. Increasingly, CIPS is viewed as a strategic attempt to reduce dependence on the US-dominated SWIFT system, which continues to control much of the world’s financial messaging and cross-border transactions under substantial Western, particularly American, influence.
Although CIPS remains significantly smaller and less influential than SWIFT in terms of scale and operational reach, its importance lies not merely in its current size, but in the broader global direction it represents. China, alongside a growing number of emerging economies, is seeking to build a more diversified financial architecture, one that facilitates trade settlements in local currencies and reduces dependence on the US dollar in trade, investment, and reserves. These developments coincide with the expansion of BRICS, the increasing use of local currencies in international trade, and growing interest in sovereign digital currencies, all of which point toward gradual but meaningful structural changes in the global financial system.
The critical question, however, is not whether the US dollar will collapse. Rather, it is whether the world has already entered the phase of what may be called the “erosion of unilateral financial dominance.” The United States still possesses the world’s largest economy, the deepest financial markets, and the most trusted and widely used currency. Yet the extensive use of financial instruments as tools of pressure and sanctions has encouraged many countries to search for alternatives capable of reducing their exposure to political and geopolitical risks embedded within the current system. In this context, China emerges not merely as a rising economic power, but as a country seeking what may be described as “financial sovereignty”, the ability to manage trade and financial flows beyond the complete dominance of a single global financial system.
This is where the notion of the “Thucydides Trap” becomes increasingly relevant. The ancient Greek historian Thucydides argued that the rise of a new power often generates fear within the ruling power, potentially leading to major conflict. Perhaps this is precisely what Chinese President Xi Jinping subtly alluded to during recent discussions with the American leadership. Today’s rivalry is no longer confined to trade or technology alone; it is gradually extending into the very foundations of the global financial order itself.
The world may not witness the imminent end of the dollar or SWIFT, but it is certainly witnessing the emergence of a new era—one in which the global financial system is no longer the exclusive domain of a single power, but rather an increasingly contested arena reflecting deeper transformations in the balance of global economic and geopolitical influence.
Prof. Khalid W. Al Wazani
From SWIFT to CIPS: Has the World Begun Building a New Financial Order?
By Prof. Khalid Wassef Al-Wazani
Professor of Economics and Public Policy
Mohammed Bin Rashid School of Government
In several previous articles, I argued that the world was steadily moving toward a new global financial order, one that rejects dependence on a single dominant power, a single reserve currency, and a single financial settlement system represented by SWIFT. At the time, most forecasts suggested that such a transformation would gradually emerge during the next decade. Yet current geopolitical developments indicate that the birth of this new financial order may be arriving far sooner than expected. Strategic tensions, and perhaps miscalculations among major powers, have accelerated the transition. The global financial system is no longer perceived as a neutral framework for facilitating trade and international settlements. Over recent years, it has increasingly become one of the most powerful instruments of geopolitical influence.
From economic sanctions and the freezing of sovereign assets to restrictions on international transfers, states now recognize that control over the global financial system is as strategically important as control over energy resources, technology, or trade corridors. Against this backdrop, China has moved steadily and rapidly toward promoting an alternative international payment system known as CIPS, the Cross-Border Interbank Payment System. Increasingly, CIPS is viewed as a strategic attempt to reduce dependence on the US-dominated SWIFT system, which continues to control much of the world’s financial messaging and cross-border transactions under substantial Western, particularly American, influence.
Although CIPS remains significantly smaller and less influential than SWIFT in terms of scale and operational reach, its importance lies not merely in its current size, but in the broader global direction it represents. China, alongside a growing number of emerging economies, is seeking to build a more diversified financial architecture, one that facilitates trade settlements in local currencies and reduces dependence on the US dollar in trade, investment, and reserves. These developments coincide with the expansion of BRICS, the increasing use of local currencies in international trade, and growing interest in sovereign digital currencies, all of which point toward gradual but meaningful structural changes in the global financial system.
The critical question, however, is not whether the US dollar will collapse. Rather, it is whether the world has already entered the phase of what may be called the “erosion of unilateral financial dominance.” The United States still possesses the world’s largest economy, the deepest financial markets, and the most trusted and widely used currency. Yet the extensive use of financial instruments as tools of pressure and sanctions has encouraged many countries to search for alternatives capable of reducing their exposure to political and geopolitical risks embedded within the current system. In this context, China emerges not merely as a rising economic power, but as a country seeking what may be described as “financial sovereignty”, the ability to manage trade and financial flows beyond the complete dominance of a single global financial system.
This is where the notion of the “Thucydides Trap” becomes increasingly relevant. The ancient Greek historian Thucydides argued that the rise of a new power often generates fear within the ruling power, potentially leading to major conflict. Perhaps this is precisely what Chinese President Xi Jinping subtly alluded to during recent discussions with the American leadership. Today’s rivalry is no longer confined to trade or technology alone; it is gradually extending into the very foundations of the global financial order itself.
The world may not witness the imminent end of the dollar or SWIFT, but it is certainly witnessing the emergence of a new era—one in which the global financial system is no longer the exclusive domain of a single power, but rather an increasingly contested arena reflecting deeper transformations in the balance of global economic and geopolitical influence.
Prof. Khalid W. Al Wazani
From SWIFT to CIPS: Has the World Begun Building a New Financial Order?
By Prof. Khalid Wassef Al-Wazani
Professor of Economics and Public Policy
Mohammed Bin Rashid School of Government
In several previous articles, I argued that the world was steadily moving toward a new global financial order, one that rejects dependence on a single dominant power, a single reserve currency, and a single financial settlement system represented by SWIFT. At the time, most forecasts suggested that such a transformation would gradually emerge during the next decade. Yet current geopolitical developments indicate that the birth of this new financial order may be arriving far sooner than expected. Strategic tensions, and perhaps miscalculations among major powers, have accelerated the transition. The global financial system is no longer perceived as a neutral framework for facilitating trade and international settlements. Over recent years, it has increasingly become one of the most powerful instruments of geopolitical influence.
From economic sanctions and the freezing of sovereign assets to restrictions on international transfers, states now recognize that control over the global financial system is as strategically important as control over energy resources, technology, or trade corridors. Against this backdrop, China has moved steadily and rapidly toward promoting an alternative international payment system known as CIPS, the Cross-Border Interbank Payment System. Increasingly, CIPS is viewed as a strategic attempt to reduce dependence on the US-dominated SWIFT system, which continues to control much of the world’s financial messaging and cross-border transactions under substantial Western, particularly American, influence.
Although CIPS remains significantly smaller and less influential than SWIFT in terms of scale and operational reach, its importance lies not merely in its current size, but in the broader global direction it represents. China, alongside a growing number of emerging economies, is seeking to build a more diversified financial architecture, one that facilitates trade settlements in local currencies and reduces dependence on the US dollar in trade, investment, and reserves. These developments coincide with the expansion of BRICS, the increasing use of local currencies in international trade, and growing interest in sovereign digital currencies, all of which point toward gradual but meaningful structural changes in the global financial system.
The critical question, however, is not whether the US dollar will collapse. Rather, it is whether the world has already entered the phase of what may be called the “erosion of unilateral financial dominance.” The United States still possesses the world’s largest economy, the deepest financial markets, and the most trusted and widely used currency. Yet the extensive use of financial instruments as tools of pressure and sanctions has encouraged many countries to search for alternatives capable of reducing their exposure to political and geopolitical risks embedded within the current system. In this context, China emerges not merely as a rising economic power, but as a country seeking what may be described as “financial sovereignty”, the ability to manage trade and financial flows beyond the complete dominance of a single global financial system.
This is where the notion of the “Thucydides Trap” becomes increasingly relevant. The ancient Greek historian Thucydides argued that the rise of a new power often generates fear within the ruling power, potentially leading to major conflict. Perhaps this is precisely what Chinese President Xi Jinping subtly alluded to during recent discussions with the American leadership. Today’s rivalry is no longer confined to trade or technology alone; it is gradually extending into the very foundations of the global financial order itself.
The world may not witness the imminent end of the dollar or SWIFT, but it is certainly witnessing the emergence of a new era—one in which the global financial system is no longer the exclusive domain of a single power, but rather an increasingly contested arena reflecting deeper transformations in the balance of global economic and geopolitical influence.
Prof. Khalid W. Al Wazani
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From SWIFT to CIPS: Has the World Begun Building a New Financial Order?
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