The conventional wisdom in western economic circles has been that USD reserve currency status is secure despite USAs chronic and growing trade and fiscal deficits. Say something enough and it becomes the accepted wisdom, especially when it serves the interests and biases of everyone saying it. The idea that China could engineer an alternative trade payments regime has generally been dismissed with the argument that Chinas financial system does not have the depth, legal system transparency backing and universal acceptance that the USD/US does. There is some truth in this argument but it is clearly not as robust as mainstream western commentators have believed it to be. China has made no secret of its intention to build an alternative to USD/SWIFT trade payments, but it has also recognised the scale of what is required to achieve this ambition and the risk inherent in launching an alternative while China remains still reliant upon the USD/SWIFT system- it is a delicate process. But Chinas economic/trade strength has reached the point where it would be extremely difficult for the US to apply broad SWIFT trade payments sanctions on China and meanwhile China has quietly built alternative/shadow banking trade payments options, like mBridge in collaboration with other nations.

Regaining control over Hong Kong has been crucial in assisting in developing this. Hong Kong being an integral part of the global banking system built by Britain and the US. China has enabled alternative trade payments with Iran and Russia to enable them to bypass the US/SWIFT sanctions imposed upon them- demonstrating that capacity to others who might be interested. Chinas ability to now supply almost all of the manufactured product lines required for a modern economy assists in this.

With Russia and Iran now settling their oil and gas trade outside of the SWIFT/USD hegemony others are also showing interest. The Saudis and others have recently joined BRICS and mBridge. More recently BIS abandoned its patronage of mBridge because it had reached a point where it could be used to breach SWIFT sanctions. With Iran, Saudi Arabia and UAE as members, Brics countries produce about 44% of the world's crude oil.

How exactly China enables trade payments for Russia and Iran is unclear- but we know is it is not directly via SWIFT and probably denominated in Yuan. Like the shipments themselves which are done mostly using 3rd tier tankers and small non state independent Chinese oil traders called teapot refiners, the payments appear to be made via a shadow banking network. One outside of US/SWIFT control and jurisdiction. Demonstrating such a capacity appears to have attracted the interest of the Saudis whose secret preferential access to USTs over 50 years ago formed the basis of the petrodollar. Trumps tariffs alienate traditional allies of the US, like Europe, Japan and others and the trust in and reliance on the USD is weakened. This advances the use of the Euro and the potential for Chinas mBridge and other mechanisms to be used instead of USD.

Europe was long reluctant to sanction Iran but could be relied upon to support the US sanctions in the end. That unity of western powers is now much reduced.

There is an opening for China to rapidly advance its long held ambitions to launch an alternative or alternatives to the USD/SWIFT hegemony. They could more probably now involve links with the Euro, Yen and other major economies.

Since the IMFs reserve currency board invited China to join its exclusive club post GFC, because of Chinas huge economic ballast and significance in the post GFC recovery, China has been an integral part of the traditional SWIFT/USD hegemony- but at the same time has been working to build alternatives.

China was and still is the only IMF reserve currency board member that is not monetarily and militarily subservient to the US.

Chinas CBDC appears to be crucial to its trade payments protocol ambitions- Jack Mas alipay posed a threat to Xis CBDC and Ma was swiftly sidelined. Now China is in a better position than ever before to match its trade mass leverage with trade payments infrastructure. mBridge is a protocol designed to enable trade payments between nations using their respective CBDCs. So it is a global monetary system protocol designed to succeed SWIFTs 1960s analogue technology. Ever since the Opium Wars where Britain positioned its banks in Hong Kong and enable predatory trade upon China, China has understood the strategic alignment of moinetary and military systems.

As China now builds most of the worlds merchant shipping it also builds most of the worlds military vessels...and it along side military expansion building the monetary protocols to align with and be supported by its military power projection. It took more than 100 years for China to assimilate and respond to western imperialism, but it has learned the lessons we imposed...and is now reverse engineering the mechanisms we employed- mercantilism, militarism and monetary hegemony.

USA and The West in its woke entitled spendthrift fiat debt funded indulgence has been caught vulnerable and now, in disunity.

Trumps tariffs, crude and short term fixes that they are, recognise the urgency of the challenge. They should enable the roll over of debt obligations expiring this year, but for how long? The market will speak its judgement.