Credit Suisse Analysis: Global Monetary Order to Face Tremendous Changes, Renminbi Challenging Dollar Dominance, Bitcoin to Benefit from It

A Swiss credit investment strategist predicted in a report that the global monetary order will undergo a major change, with inflation and geopolitical tensions likely to shake the dominance of the US dollar. With the support of commodities, the Chinese yuan is expected to appreciate significantly. He also believes that after the war between Ukraine and Russia, money will no longer be the same, and Bitcoin may benefit from this.

The Bretton Woods System III

Former Federal Reserve official and current Credit Suisse currency market expert Zoltan Pozsar's latest report, titled "Bretton Woods III", points out that Western sanctions against Russia could lead to a paradigm shift in the global monetary system.

Commodity Crisis

The Ukraine-Russia war has led to a global commodity crisis, pushing nickel prices to historic highs and oil prices to a 14-year high. He believes this will fuel inflation in Western countries, threatening their financial stability, while the Renminbi is expected to strengthen with the support of commodities. He stated:

The global commodity crisis triggered by the Russia-Ukraine conflict is similar to the oil crisis we faced in 1973, but the difference is that this is driven by consumers rather than suppliers. Russia is facing the consequences of sanctions, and the trend in commodity prices driven by sanctions is threatening Western financial stability.

Note: In 1973, the Organization of the Petroleum Exporting Countries (OPEC) imposed an oil embargo to combat Israel, causing oil prices to quadruple within a year.

Rise of the Renminbi

Zoltan Pozsar believes that Western central banks, due to their compliance with sanction policies, are unable to fill the funding gap in the market. In contrast, the People's Bank of China is not subject to such restrictions. China can sell U.S. bonds while buying cheap Russian commodities, which helps China control inflation.

This marks the emergence of the "Euro/Renminbi" market and is also the first step for China to break the dominance of the "Euro/Dollar."

Benefit for Bitcoin?

Pozsar emphasizes that the current crisis, including since the decoupling of the U.S. dollar from gold in 1971, is different from any previous situation, symbolizing the end of the era of Commodity-based Money:

From the gold-backed Bretton Woods I to the internally funded government debt-backed Bretton Woods II, and now to the externally funded gold and commodity-backed Bretton Woods III, "money" will no longer be the same after this war.

He mentions Bitcoin only once at the end of the article, suggesting that if Bitcoin survives in the future, it will also benefit from the transformation of the monetary system.