Germany’s patience for the Trump administration is running thin. The policy of aggressive sanctions imposed by the US on Iran and Turkey have prompted Germany, Europe’s largest economy, to consider establishing its own independent payment system which can in no way be influenced by the United States. Economists expect that such a move would cause the US dollar to drop, but have a positive effect on Bitcoin (and potentially Ripple).
The sanctions placed by the Trump administration were orchestrated to place diplomatic pressure on both Turkey and Iran. The US has requested that Turkey release evangelical pastor Andrew Brunson, who has been detained there for over two years, whilst the sanctions on Iran have been due to its breach of the nuclear program, by continuing to develop missiles and other regional “maligning” activities.
Trump has made clear, both on and off his Twitter account, that “anyone doing business with Iran will not be doing business with the United States”.
The sanctions prohibit Iranian purchase of US dollars, thereby making it far more difficult to engage in any form of international trade. The sanctions also apply to Iranian industrial products including airplanes, carpets and the automotive sector. Beyond that, these sanctions are also “extra-territorial”, meaning that non-US firms and financial entities who choose not to comply with these sanctions could face fines or risk being cut off from the US dollar centric financial arena.
This all begs the question, “Why does Germany care”? Simply put, Germany’s interest lies in its strong trade activities with Iran.
At this stage, Germany’s response has been that of cautious deliberation. German Foreign Minister, Heiko Maas, stated that “… it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up a system independent of SWIFT”. This proposal has the potential to entirely reshape the world’s economic arena, putting Bitcoin and other major cryptocurrencies in a favorable position while simultaneously weakening the trade utility of the US dollar, causing potential devaluation of the US dollar.
Cryptocurrencies are already used as an alternative to gold, and are seen as a viable solution to protect national economies from negative external and internal economic tensions. In its short history, there have been numerous examples of Bitcoin being successfully used in this situation. The most recent example was earlier this year when Venezuela invested in its own national cryptocurrency as a means to stem the tide of inflation.
The creation of an international cryptocurrency based alternative to the SWIFT system would prevent US influence and diplomatic interplay over international finance. Although the SWIFT system is based in Belgium, it is still subject to US influence. An alternative would dilute both US influence and USD control over international monetary policy.