Monetary Order
Current Assessment: June 2026
The Old System Quietly Broke. Three New Ones Are Competing to Replace It.
For about 50 years, the U.S. dollar dominated the world’s money system through a specific deal with oil-producing countries. That deal has quietly ended, and right now three different systems are racing to fill the gap it left behind, one led by China, one built on top of the dollar but working very differently than money has ever worked before, and one being built by Western governments as a slower, more careful response.
A few terms worth knowing before diving in:
The petrodollar system was an arrangement where oil got priced and sold in U.S. dollars worldwide. That meant every country buying oil needed dollars first, which kept demand for the dollar enormous no matter what else was happening in the world.
Reserve currency means the type of money that countries and central banks around the world choose to hold as their emergency savings and trade backup. The U.S. dollar has been the world’s main reserve currency for generations.
A stablecoin is a digital token built to always be worth $1 (or another fixed value), backed by real dollars or similar assets sitting in reserve. Think of it as a digital dollar that moves over the internet rather than via a bank wire.
CBDC stands for Central Bank Digital Currency, a digital version of a country’s official money, issued and controlled directly by that country’s central bank or government.
Here’s where things stand right now:
Dollar’s share of global reserves: below 57%, the lowest it’s been since 1995
Money already moved through China’s alternative system (mBridge): $55.5 billion
Stablecoins currently in circulation: $321 billion
A major new U.S. law for stablecoins: takes effect July 18, 2026
Signal: HIGH. This is described as a structural shift, not just a temporary blip, meaning it’s expected to matter for years, not just one news cycle.
The Old System Is Quietly Falling Apart
How the petrodollar worked, and why it just ended
Here’s the deal that powered the dollar’s dominance for half a century: countries selling oil agreed to price and sell it in U.S. dollars. In return, those countries took the dollars they earned and invested much of them in U.S. government debt (Treasury bonds). This created a powerful cycle: the whole world needed dollars to buy oil, oil-selling countries recycled those dollars right back into U.S. debt, and that kept the dollar incredibly strong and in demand, year after year.
That formal agreement expired in June 2024. It was never renewed, and no replacement deal has been signed. Quietly, one of the most important financial arrangements in modern history just lapsed, and most people never noticed.
The visible effects are already showing up. The U.S. Dollar Index (a measure of how strong the dollar is against other major currencies) has fallen about 10% since its January 2025 peak, the steepest first-half decline since 1973. The dollar’s overall share of global reserves has dropped below 57%, the lowest level since 1995, down from 72% back in 2001.
Central banks are quietly preparing for this shift. They’ve bought more than 1,000 tonnes of gold for three years running now, more than double the typical pace from 2010 through 2021. When the world’s central banks, generally the most cautious, careful institutions in finance, start buying that much gold, it’s a signal they’re hedging against the dollar’s long-term dominance, not just reacting to short-term news.
An important wartime detail that outlasts the war itself. During the recent conflict in Iran, the country collected shipping tolls through the Strait of Hormuz in Chinese currency, using China’s alternative payment system instead of the usual dollar-based one. That’s the first time this kind of alternative payment rail was used in an actual wartime, geopolitical situation. Even as that conflict moves toward resolution, this precedent doesn’t just disappear; other countries now have a real-world example to point to if they want to reduce their own dependence on the dollar system in the future.
The numbers behind this story
Dollar Index (DXY): around 100, down about 10% from its peak above 109 in January 2025. This is the steepest first-half decline since 1973.
Dollar’s share of global reserves: about 57%, the lowest since 1995, and down sharply from 72% back in 2001. The main driver: oil-exporting countries used to automatically recycle their dollar earnings into U.S. debt. With that mechanism gone, they’re spreading their money across more currencies and assets instead.
Central bank gold buying: over 1,000 tonnes for a third year in a row, more than double the historical average from 2010-2021. Central banks are buying real, physical assets as protection against their paper currency holdings losing value over time.
The petrodollar agreement itself formally expired June 9, 2024, with no renewal and no replacement deal. Saudi Arabia, the country most associated with the original deal, is now free to price its oil in any currency it wants, and notably, it joined China’s alternative payment system (mBridge) as a full member that same year.
What’s Stepping In to Fill the Gap
China’s alternative: mBridge and CIPS
mBridge is a digital payment system jointly built by several central banks, including the Bank for International Settlements (a kind of central bank for central banks), and involving China, the UAE, Hong Kong, and Thailand. It lets countries settle cross-border payments directly with each other, without needing to convert everything through U.S. dollars first. So far, it’s processed $55.5 billion in transactions, a 2,500-times increase since 2022, with settlement happening in about 15 seconds and no involvement from SWIFT (the traditional Western-controlled international payment messaging system banks have relied on for decades).
CIPS (the Cross-Border Interbank Payment System) is China’s own direct alternative to SWIFT. It allows payments in Chinese currency (the yuan) for transactions that previously had to go through the dollar system as an intermediate step. As mentioned above, Iran actually used this system during the recent conflict to collect tolls for ships passing through the Strait of Hormuz.
The key point: these aren’t small experiments or test projects. They’re real, operational systems handling real money, and the volumes keep growing. Saudi Arabia, the UAE, Thailand, and Hong Kong are all already participating.
The West’s slower, more careful response: Project Agora
Project Agora is essentially the Western world’s answer to mBridge, a joint project involving 7 central banks and more than 40 financial institutions, including the Federal Reserve Bank of New York, the Bank of England, and the Bank of Japan. It successfully tested a working version of its technology in March 2026 and is moving into real-value testing sometime in 2026.
Here’s the genuinely interesting part: both the Chinese-led system and the Western-led system are building very similar underlying technology, a digital, “tokenized” way of settling payments between countries. It’s less a story of two completely different visions, and more a story of two competing blocs racing to build similar new plumbing first.
The Dollar’s Own Digital Counterattack
Stablecoins: still the dollar, but working completely differently
Here’s an important reframe: stablecoins aren’t really a cryptocurrency story. They’re a dollar infrastructure story. There are currently $321 billion worth of dollar-backed stablecoins circulating globally, digital tokens that are each backed by a real dollar (or dollar-equivalent asset) sitting in reserve somewhere.
A major new law, the GENIUS Act, takes effect on July 18, 2026, and it changes stablecoins from an unregulated, legally gray product to officially licensed federal financial infrastructure. Major companies are already building around this. Visa and Mastercard have both built their own stablecoin settlement systems. A company called X Money is offering 6% returns on dollar-backed balances, directly competing with what a normal bank savings account offers.
Why this matters as the West’s answer to mBridge: stablecoins keep the dollar at the center of the system, technically. But they work in a fundamentally different way than the dollar has ever worked before, they’re programmable, meaning rules can be coded directly into how the money behaves, and conditional, meaning a private company sets the terms for how and when you can use your own money, through their own terms of service, not through some publicly auditable, transparent code that everyone can inspect equally. That distinction (a company’s private rules versus open, inspectable code) is going to matter a lot for what comes next in this story.
Key dates to watch
June 2024: The petrodollar agreement quietly expired with no renewal.
July 18, 2026: The GENIUS Act’s implementation rules take effect, making stablecoins officially licensed financial infrastructure.
Watch for: any major oil-producing country (Saudi Arabia, UAE, or another Gulf nation) agreeing to price oil in Chinese currency instead of dollars. That single event would be the clearest signal yet that this shift has moved from “the old system is fading” to “a real new system has arrived” to directly challenge the dollar’s role.
What this means for your money, in plain terms
Consider gold as a hedge against this specific shift, not just regular inflation. Funds like IAU or GLD let you hold gold easily. Central banks buying gold right now are doing it specifically because they’re diversifying away from the dollar as their primary reserve, not just hedging against rising prices. When the buyers are entire countries, that demand tends to be steady and long-lasting rather than a short-term trend.
Silver (a fund like SLV) offers a similar but slightly different angle. It benefits from the same currency-diversification trend gold does, but it also has real industrial demand (it’s used in manufacturing and electronics), giving it two separate reasons people might want to own it.
Payment infrastructure companies can benefit no matter which system ultimately wins. Visa (V) and Mastercard (MA) have built settlement systems on the dollar-stablecoin side, but they’re also positioned to benefit from cross-border payment growth generally, regardless of whether the dollar-based system or the Chinese-led system ends up dominating in the long run. They own the actual rails the money moves on, not a bet on one specific currency winning.
If you have investments tied to Japan, protect against currency swings. As explained in the Fed Rates piece, the Japanese yen has been strengthening as money flows back into Japan. Currency-hedged investment tools (like a fund called DXJ, instead of an unhedged one like EWJ) can protect your returns from being eaten up by currency movements that have nothing to do with how the underlying Japanese companies are actually performing.
Spreading investments internationally is a long-term hedge, not just a short-term bet. Funds covering Latin America (ILF) or developed international markets (EFA) benefit if the dollar keeps losing reserve-currency dominance over time, since assets priced in other currencies effectively become worth more in dollar terms as the dollar weakens.
Watch closely for any major oil deal priced in Chinese currency. This single event, more than almost anything else in this piece, would be the clearest sign that the new system has moved from “quietly being built” to “actively replacing” the dollar’s old role.
The Hidden Layer Underneath All of This
It doesn’t matter which system wins, because they’re both built the same way underneath
Here’s a genuinely important point that cuts across everything described above: regardless of whether the dollar-based stablecoin system or the Chinese-led digital currency system ends up winning this competition, both of them are being built on top of the exact same kind of technology underneath, systems that track transactions in detail, flag unusual behavior automatically, and verify your identity constantly.
Every single transaction made through these new programmable money systems is subject to AI-powered scoring and analysis. Every automatic spending limit, every real-time fraud flag, every identity check requires significant computing power behind the scenes. The companies that build and supply that underlying computing infrastructure profit from this trend regardless of which monetary system, Western or Chinese-led, ultimately comes out ahead.
This connects to a broader idea this publication tracks closely: it’s possible to recognize that owning shares in these infrastructure companies is a reasonable investment decision, while also being clear-eyed and concerned about what the technology itself actually does to people’s privacy and financial freedom. Investing in infrastructure isn’t the same as endorsing everything built on top of it.
The companies behind the infrastructure
Computer chips and computing power: companies like Nvidia (NVDA), Taiwan Semiconductor (TSM), and Broadcom (AVGO) make the actual silicon chips that power every AI system doing this kind of transaction scoring and identity verification. This demand exists regardless of which monetary system wins, since both need massive amounts of computing power.
Electricity and power infrastructure: massive data centers need reliable power running 24 hours a day, something wind and solar alone can’t yet guarantee. Companies like Constellation Energy (CEG) and Vistra (VST) are leaning into nuclear power specifically for this reason. Microsoft has even restarted the Three Mile Island nuclear plant for this purpose, and Google has signed deals for small modular nuclear reactors. Quanta Services (PWR) builds the power transmission lines themselves, while Vertiv (VRT) and Eaton (ETN) make the power management and cooling equipment that data centers need to actually run.
Water and cooling: This might sound like an unrelated category, but a single large data center can use 1 to 5 million gallons of water every single day just for cooling its equipment. Companies like American Water Works (AWK) and Essential Utilities (WTRG) are regulated utility monopolies that can pass rising costs on to customers, making them relatively stable investments. Xylem (XYL) makes water treatment and efficiency technology, and PHO is a diversified fund that covers several water-related companies.
Data center operators: companies like Equinix (EQIX), Digital Realty Trust (DLR), and Iron Mountain (IRM) actually own and rent out the physical data center space where all this computing happens. Worth knowing: Northern Virginia alone hosts about 70% of all U.S. internet traffic, which means there’s real, somewhat underappreciated risk in just how geographically concentrated this critical infrastructure actually is.
So, Is This a “Multipolar World”? A Quick Word on That Idea
You may have heard the term “multipolar world” used to describe where global power is heading. It’s worth being precise about what that actually means, and whether it’s exactly what’s happening here.
Multipolar generally refers to a world with several roughly equal centers of power, rather than a single country (or currency) clearly running the show. For most of the last 50 years, the world has been largely unipolar in terms of money; the U.S. dollar has been the dominant choice, with no real rival close to its size or reach.
What this piece actually describes is a step in between those two ideas, and it’s worth naming precisely rather than reaching for the trendiest term. The old single-dominant-currency system (the petrodollar) just broke. What’s emerging right now looks less like many equal powers sharing the stage, and more like two major camps racing to become the next dominant system: one centered on China’s payment rails (mBridge and CIPS), and one still built around the dollar, but reinvented as something more programmable and conditional (stablecoins and Project Agora). That’s closer to a bipolar shift (two big rivals) than a true multipolar one (many roughly equal players).
That said, it’s reasonable to think this could evolve into something more genuinely multipolar over time. Other major economic blocs, the European Union, India, or a coalition of smaller countries, could eventually build or join their own competing systems too, rather than picking a side between just these two camps. Nothing about this is locked in yet.
Why this distinction actually matters for your money, not just for trivia: if this turns into a clean two-system competition (the U.S. dollar’s new digital version versus China’s system), the practical question becomes which side a given country, company, or transaction ends up using, a more predictable, binary kind of risk to think through. If it becomes genuinely multipolar instead, with many different systems all coexisting and competing, currency and payment risk gets messier and harder to predict, since money might need to move smoothly across many different, possibly incompatible systems rather than just two. Either way, the underlying lesson from this piece stays the same: owning a mix of physical assets (gold, silver), payment infrastructure that works across systems (Visa, Mastercard), and broad international exposure remains a reasonable hedge regardless of exactly how many “poles” this world ends up having.
One company worth flagging carefully, without an endorsement either way
Palantir (PLTR) sits at an unusually direct intersection of government surveillance contracts, AI-driven behavior analysis, and the kind of identity verification systems that programmable money relies on. There’s a real, legitimate investment case to be made here. There’s also a real, honest tension: a publication built around skepticism of exactly this kind of data-driven, behavior-tracking infrastructure has to be upfront about the fact that this company sits right at the center of what it’s been raising concerns about elsewhere. Naming the company without either recommending or condemning it as an investment is the most honest way to handle that tension. If you do decide to own it, it’s worth doing so with a full, clear-eyed understanding of what the company actually builds and who it builds it for.