{"id":10797,"date":"2022-03-08T17:25:08","date_gmt":"2022-03-08T17:25:08","guid":{"rendered":"http:\/\/ci029ba4bbf0002433"},"modified":"2022-03-08T17:25:08","modified_gmt":"2022-03-08T17:25:08","slug":"credit-suisse-ensuing-new-financial-order-will-benefit-bitcoin","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/markets\/credit-suisse-ensuing-new-financial-order-will-benefit-bitcoin","title":{"rendered":"Credit Suisse: Ensuing New Financial Order Will Benefit Bitcoin"},"content":{"rendered":"
<\/div>

The Russian-Ukrainian war will create a new world financial order from which Bitcoin is set to benefit, according to Credit Suisse.<\/p>\n

Zoltan Pozsar, global head of short-term interest rate strategy at the giant investment bank, wrote in a Monday report<\/a> that Western sanctions on Russia are likely to cause a paradigm shift in the way the world organizes money and reserves, a \u201cBretton Woods III\u201d kind of scenario.<\/p>\n

\u201cFrom the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money, to Bretton Woods III backed by outside money,\u201d the strategist wrote.<\/p>\n

Pozsar argues that the fall of Bretton Woods II ensued last week as G7 countries decided to seize Russia\u2019s foreign exchange (FX) reserves, leading to a rise of outside money \u2013 reserves kept as commodities \u2013 over inside money \u2013 reserves kept as liabilities of global financial institutions.<\/p>\n

\u201cWe are witnessing the birth of Bretton Woods III \u2013 a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West,\u201d the report states.<\/p>\n

Russia, a surplus agent in the financial system<\/a>, can now no longer make use of the hefty FX reserves it accumulated through its commodity exports over the decades to defend its falling ruble or aid its local economy. Moreover, Russia\u2019s ability to export its commodities has been severely hurt due to the \u201cbuyer\u2019s strike\u201d in the West.<\/p>\n

\u201cWhat we are seeing at the 50-year anniversary of the 1973 OPEC supply shock is something similar but substantially worse \u2013 the 2022 Russia supply shock, which isn\u2019t driven by the supplier but the consumer,\u201d the strategist wrote. \u201cThe aggressor in the geopolitical arena is being punished by sanctions, and sanctions-driven commodity price moves threaten financial stability in the West.\u201d<\/p>\n

Pozsar argues that while Western central banks cannot close spreads between Russian and non-Russian commodity prices as sanctions lead them in opposite directions, the People\u2019s Bank of China can \u201cas it banks for a sovereign who can dance to its own tune.\u201d<\/p>\n

\u201cIf you believe that the West can craft sanctions that maximize pain for Russia while minimizing financial stability risks and price stability risks in the West, you could also believe in unicorns,\u201d Pozsar wrote.<\/p>\n

As outside money keeps trumping inside money, this crisis will likely emerge and end differently than all others ever since Nixon broke off the gold standard in 1971 \u2013 which marked the end of the era of commodity-based money.<\/p>\n

\u201cWhen this crisis (and war) is over, the U.S. dollar should be much weaker and, on the flipside, the renminbi much stronger, backed by a basket of commodities,\u201d Pozsar wrote. \u201cAfter this war is over, \u2018money\u2019 will never be the same again\u2026and Bitcoin (if it still exists then) will probably benefit from all this.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The foundations of Bretton Woods II crumbled last week when the G7 seized Russia\u2019s foreign exchange reserves, the investment bank said.<\/p>\n","protected":false},"author":2572,"featured_media":7800,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[1614,93,1278],"class_list":{"0":"post-10797","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-credit-suisse","9":"tag-news","10":"tag-war"},"author_data":{"id":2572,"name":"Namcios","nicename":"namcios","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/pfp-96x96.png"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/earth.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/10797","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2572"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=10797"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/10797\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/7800"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=10797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=10797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=10797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}