Great power conflict puts the dollar’s exorbitant privilege under threat
Since the end of the cold war, the world has largely enjoyed a unipolar era – the US was the undisputed hegemon, globalisation was the economic order and the dollar was the currency of choice. But today, geopolitics once again poses a formidable set of challenges to the existing world order. That means investors have to discount new risks.
China is proactively writing a fresh set of rules as it replays the Great Game, creating a new type of globalisation through institutions such as the Belt and Road Initiative, the Brics+ group of emerging economies and the Shanghai Cooperation Organisation, a collective security alliance of eight countries.
While under lockdown, Beijing forged a special relationship with Moscow and Tehran. This relationship with Russia, with the unwitting assistance of global warming, is helping extend China’s BRI through Arctic shipping lanes. And late last year, we saw the very first summit between China and the Gulf Cooperation Council and hence a deepening of China’s ties with Opec+. All of this may eventually lead to «one world, two systems».