Introduction
The goal behind introducing the Euro currency was to prove the role of the European Union (EU) by presenting an alternative to the American dollar, which has dominated international monetary relations since the end of World War II.
At first, the Euro was a big development in the international monetary system. As it has become the first real competitor to the dollar, where the European currency is based on a strong economy and one of the largest capital markets in the world, it was suggested that in a few years euro will become an international currency, with the same degree of importance as the dollar.
Especially since events have shown that the dollar is unable to perform its role as a store of value in an economy characterized by financial crises and lacking stability.
However, the use of the Euro in international transactions remains very modest outside the traditional areas of influence of some Eurozone countries. So; the share of the euro in the reserves of central banks around the world does not exceed 20 percent, while the share of the dollar reaches about 60 percent and the rest of the currencies are 20 percent, including the yuan, according to statistics from the International Monetary Fund in 2022.
Developments over the last decade have proven that the Euro is unable to break the dominance of the US dollar, despite all the economic potential that the Eurozone possesses as a very large exporter of goods and services in the world.
Even if the Economic considerations are necessary but alone they are not sufficient to determine the position of any currency in the international monetary system, and there are political considerations that must be taken into account. The very limited capabilities of the Eurozone member states at the military level, and the provision of a security umbrella, outside their historical areas of influence, would explain the current performance of the euro, which does not meet the level required by the Europeans.
This situation creates a weak position for many countries around the world to give a more important role to the Euro in their monetary affairs, despite their distinguished trade and financial relations with the Eurozone countries.
The Eurozone countries are the first economic partners for many developing countries that export raw natural resources in Africa and Asia, and the latter's trade balances record large deficits in favor of the Eurozone.
In theory, these countries are supposed to accept the settlement of their trade dealings with the Eurozone in the common European currency, instead of passing through the currency of another country, which is the US dollar, with this means bearing the exchange risks from the dollar to the euro. When we think about the security aspects and the geopolitical dimension of the relationship of the regimes in these countries with America, it becomes clear why these countries remain holding to the dollar… to maintain the continuity of the US security umbrella.
For these considerations, we see that some countries are moving towards replacing the dollar with the Chinese yuan or other currencies except the Euro, in settling their oil exports. But there might be sort of hesitation about America’s reaction and the consequences it might have on its national security.
The question here is…
Is it possible for China to protect these countries from America, if it takes military action?
I find this difficult, at least for the time being, but… still not impossible.
In light of the changes taking place in the world, and within the framework of the efforts of China, Russia, and the BRICS bloc to build a new international economic system; As China is the second largest economy in the world, it has presented a model that relies on mobilizing its forces and developing its infrastructure, and has connected its vast areas with an effective network of transportation and communications. Moreover, China adopts the work patterns and means of production that are most appropriate to its conditions and capabilities.
The Third World was impressed by the Chinese Renaissance and the “One Belt One Road” project which is not a new project to control the world, but rather it is an international project in which the relations of continents and peoples have been organized for a long time.
China and Russia have decided to conduct trade transactions through the yuan and the ruble, knowing that this agreement is an important indicator for many reasons, knowing that trade exchange between China and Russia has witnessed significant development since the start of the Russian-Ukrainian war, especially in oil and gas.
This decision is in the interest of both parties, mainly for Russia, as it contributes to moving away from the dollar, the Euro, and the sterling, and it is also an important factor in the stability of the ruble and the banking systems that have already begun issuing loans in the Chinese yuan.
Conclusion
Blockchain and Cryptocurrency can play a vital role in the international mechanism by being an alternative and an assistant, in the first stage, to the Bretton Woods institutions, the International Monetary Fund (IMF), and the World Bank, in addition to establishing a new international trade organization that accommodates all the economic changes taking place in the world, replacing the World Trade Organization.
These are the preliminaries for establishing a new international economic order.