The Geopolitical battle over currency control
Peter McGahan
Monday 28th April, 2025.
IN the fifth of a series on the reduction of dollar power (and inevitable value of the dollar) and the impact that will inevitably have on your finances, I wanted to cover how the dollar has been weaponised and used as a geopolitical tool of compliance, punishment and hierarchy, and how that has led to governments, wealthy individuals and institutions moving away from it to protect themselves.
In itself, it’s a two-part sub-series – the problems of weaponization, and then what they are doing about it, but it’s very important in the overall understanding of the future of the dollar and the motivation and where we might one day find peace. Long sigh.
Since 2014, Russia and others across the world have been quietly preparing alternatives to the dollar. They’ve built parallel systems, stockpiling gold, reducing dollar exposure. Why? Because money has been turned into a geopolitical leash.
The weaponisation has deeper historical roots: Iran in 1979 and since. Venezuela. Saddam Hussein sought to sell oil in euros. Gaddafi backed a pan-African gold-backed dinar. Both faced military interventions shortly after.
The United States has long enjoyed what economists call “exorbitant privilege” - the ability to print the world’s reserve currency, set global interest rates, and finance deficits without fear of collapse. That privilege was based on trust. The dollar worked because people believed it wasn’t political. It was reliable and safe in the face of difficulties.
That illusion collapsed in 2022.
In response to the Ukraine war, the US and its allies froze over $300 billion in Russian central bank reserves - legally owned funds held in supposedly neutral Western institutions. You’d have to back to the Cold War to find such a move, and even then, Moscow’s reserves were left untouched.
An aside…You need to set aside any political bias or prejudice to think this through correctly.
This was a message to the world: your money is only yours if we say so.
The headlines focused on sovereign assets. But what really spooked the world’s financial elite were the yachts, the frozen mansions, the seized private jets.
Russian oligarchs like Roman Abramovich saw their wealth which was legally held in London, New York, or Geneva, just vanish with a stroke of a sanctions pen. No trial, no hearing, no appeals process. Just accusation, then poof, off it goes.
So, if you're a Gulf prince, an African magnate, or a Southeast Asian tycoon, that hits close the pocket. Many had stored their wealth in Western banks to avoid instability back home. Now they’re wondering: is the West any safer?
As one analyst put it - “the moment they froze Abramovich, they told the world: legality is no longer protection. Politics is.”
In 2019, the Bank of England refused to return over $1.9 billion of Venezuelan gold, citing recognition of opposition leader Juan Guaidó over the sitting President Nicolás Maduro.
Again, this wasn’t a financial dispute, it was a political one.
For many in the Global South, this was the final straw. Sovereign wealth, once seen as untouchable, could now be withheld if you fell afoul of Western interests.
Trust has evaporated and once that trust is gone, no amount of reassurance can fully restore it.
The dollar is now, rightly or wrongly, seen not as a global public good, but as a tool of compliance. Use it, or risk exclusion. Agree with US policy, or risk losing your assets.
The dollar became a compliance mechanism, not a currency.
The freezing of Russian reserves was a turning point, not because it hurt Russia, but because it showed everyone else what could happen to them. The Abramovich sanctions turned that warning into a whisper among billionaires: get your money out while you can.
Venezuela's case proved the rules had changed. Staying aligned matters more than law.
The result? Countries and wealthy people are moving their capital away to protect themselves because they have to. Dedollarisation is no longer just economic policy, it’s monetary self-defence.
The dollar isn’t collapsing, it’s being rerouted around like a river whose course has changed, the old banks still exist, but the water is finding new paths, and there will be less fish and vegetation.
And for many nations, those new paths lead away from Washington’s reach. Countries are responding the only way they can: by quietly building a world where they don’t need it.
Part Two of this section will come next week.
If you have any question on dedollarisation and what it means to your finances, I’ll gladly answer it. And, for a complimentary factsheet summarising this comprehensive series on dedollarisation, please email info@wwfp.net and you’ll receive one when the series is completed.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
