It was 3 months ago when President Lula da Silva of Brazil remarked that white "blue-eyed bankers" were to blame for the global financial crisis. President da Silva's comments were just one of many diatribes among post-colonial nations against centuries old European and particularly American influence over the world's financial institutions.
Today, emerging powers in the global South met in Russia to discuss a drastic move toward transformation of the global financial architecture. The New York Times, in its standard neoliberal form, fasely described the meeting as a narrow attempt by Russia to challenge perceived American hegemony in the world-system.
For the Kremlin, undermining the dollar as the prevailing medium of exchange reflects a broader Russian belief that the United States exercises a dominance in global affairs that exceeds its diminishing power.
But the article misses the point, which is that something new and of historic proportions is happening in the world economy. In reality, the United States actually does exercise dominance in global affairs that exceeds its diminishing power. Since the 1970's the US dollar has had a virtual monopoly on global exchange. Raw materials, for example are bought and sold for U.S. dollars. Exchange rates between currencies are not fixed but fluctuate all the time, depending largely on speculation about interest rates, and trade balances. There has been no shortage of protest among developing nations against this form of American hegemony.
Today's agreement by China, Russia, India, and Brazil to possibly buy one anothers bonds to lessen dependence on the U.S. , could finally begin a structural shift against the supremacy of the US dollar. Bloomberg Financial News, citing economist Nouriel Roubini, recognized the impending effects of a push-back against US dollar hegemony.
For the U.S., a change in the role of the dollar would risk increasing its financing costs and undermining its preeminent place in the world economy...The currency has dropped 10 percent against the euro in the past three years.A more horizontal structure of international trade would essentially take out the US as middle-man and level the playing field for developing countries. For the first time in the recent history of global capitalism, there may not be a sole hegemon that controls international exchange. And that may not be such a bad thing.