The Race to Replace the Petrodollar
Two rival monetary systems are competing to run the next century of global trade. One just proved it works in war.
On March 26, 2026, Fortune reported that Iran was already charging tolls in yuan for oil transiting the Strait of Hormuz. The channel carries roughly a fifth of the world’s oil and gas. The United States could not stop the transaction. Two months later, the Bank for International Settlements announced that Project Agorá, the Western world’s answer to China’s rival payment network, had passed its simulation phase and was preparing to move to real money. Neither event received mainstream coverage. Together, they mark a turning point in the contest to determine whose rules govern global finance for the next century.
THREE THINGS YOU NEED TO KNOW
If the world stops needing dollars, your borrowing costs go up, and your government has fewer options.
Countries hold dollars because they need them to buy oil and settle trade. That demand keeps US borrowing costs low, which keeps your mortgage rate lower than it would otherwise be. Two new systems are now being built to move money without dollars. Whichever wins, the structural demand that has subsidized American borrowing for decades weakens. Ray Dalio has been explicit: when foreign governments stop buying US Treasuries, yields rise, and the cost of financing American life, public and private, goes up.
The rules being embedded in these systems will eventually govern how you send money and access your accounts.
What is being built today moves money between central banks and major financial institutions across borders. That is how it starts. China has already run this sequence: wholesale infrastructure first, retail layer second. The programmable compliance rules being tested between central banks now are the template for what reaches consumers next. There is no wall between the institutional layer and your bank account. There is only time.
The United States used financial exclusion as a weapon in 2022. By 2026, the weapon had a workaround.
When the West cut Russia off from SWIFT, it was the most powerful financial move America had made in decades. It also showed every rival exactly what to build around. Iran is now collecting yuan tolls on a fifth of the world's oil supply through Chinese banking infrastructure; the US cannot sanction without sanctioning China itself. The weapon worked once. The lesson was learned. The alternative rails are now live.
"When foreign governments stop buying US Treasuries, yields rise, mortgage rates spike, and the cost of financing American life, public and private, goes up." Ray Dalio, founder of Bridgewater Associates
How the Current System Works
SWIFT is a member-owned cooperative that serves as the backbone of international finance. More than 11,000 financial institutions use it to communicate payment instructions across borders. It does not move money. It moves messages. Banks on both ends hold the actual funds, and SWIFT tells them what to do with those funds. The process takes days. Fees accumulate through chains of correspondent banks. Every institution in that chain runs its own compliance checks, sometimes reaching different conclusions.
More importantly, SWIFT is controlled by Western institutions and subject to Western law.
On February 24, 2022, Russia invaded Ukraine. The West responded by blocking selected Russian banks from SWIFT and freezing Russia’s central bank assets. European Commission President Ursula von der Leyen stated the goal directly: to stop Russia from conducting most of its financial transactions worldwide. Russia held $630 billion in foreign exchange reserves. The sanction froze access to them. The ruble fell by more than 50 percent.
The West learned that control of financial messaging infrastructure is among its most powerful geopolitical tools. Every other country learned that dependence on that infrastructure is a permanent vulnerability.
Both lessons produced the same response: build something new.
China’s Cross-Border Layer: mBridge
The sanctions on Russia accelerated the development of a parallel network that was already processing real money.
It is called mBridge. It connects the central banks of China, Hong Kong, Thailand, the United Arab Emirates, and Saudi Arabia. It settles transactions in 15 seconds, without SWIFT, without correspondent banks, and without a public cryptocurrency in sight. It has now settled over 4,000 cross-border transactions worth roughly $55 billion. China’s digital yuan accounts for an estimated 95 percent of total volume.
mBridge runs on a permissioned distributed ledger, which means it uses blockchain technology but is controlled entirely by its participating central banks. In Bitcoin, anyone can validate a transaction. In mBridge, only the People’s Bank of China, the Hong Kong Monetary Authority, the Bank of Thailand, the UAE central bank, and the Saudi central bank can validate. The ledger is distributed in name. The power is centralized in practice.
Every transaction that runs on mBridge embeds Beijing’s compliance rules.
The BIS understood what this meant. It stepped back from mBridge in 2024, citing concerns that the platform could be used to bypass international sanctions. It then shifted its focus to building the Western alternative.
The Western Answer: Project Agora
On May 27, 2026, the BIS announced that Project Agorá had completed its simulation phase and was preparing to move to real-value transactions. The announcement received no mainstream coverage.
Agorá involves the Bank of England, the Federal Reserve Bank of New York, the Bank of France representing the Eurosystem, the Bank of Japan, the Bank of Korea, the Bank of Mexico, and the Swiss National Bank. The Bank of Canada has since joined. The private-sector participants include JPMorgan Chase, Citi, HSBC, Deutsche Bank, BNP Paribas, UBS, Mastercard, Visa, SWIFT, Euroclear, Standard Chartered, Santander, Mizuho, and others.
The platform enables what the BIS calls atomic, multi-currency settlement. A transaction either completes entirely or fails entirely. No float. No partial state. No reversals after the fact. Compliance checks run once, embedded in the transaction itself, shared across participating banks rather than duplicated at every step.
The system runs on two layers. Tokenized commercial bank deposits on one layer. Tokenized central bank reserves on the other. Each central bank operates its own ledger, preserving national control over individual currencies while connecting to a shared infrastructure for cross-border settlement.
This is not a faster wire transfer. This is money that can be programmed to refuse. Money that checks whether conditions are satisfied before it moves. Money that carries its own rules.
The financial system has never had this capability before. Now it does.
The Petrodollar Underneath it All
Since the 1970s, oil has been priced and settled in US dollars. That single arrangement is the foundation of dollar dominance. Countries need dollars to buy oil. That creates permanent global demand for the dollar, which funds the American deficit and underwrites American financial power.
That arrangement is shifting
In 2024, Saudi Arabia did not formally renew its commitment to pricing oil exclusively in dollars. The dollar’s share of global foreign exchange reserves has fallen from 71 percent in 1999 to roughly 57 percent today. A growing share of Saudi oil sold to China is being settled in yuan. India is settling Russian crude purchases in Chinese yuan and UAE dirhams, bypassing the dollar entirely.
China is not challenging the dollar’s role in oil pricing. It is building an alternative to the dollar’s role in settling it. If you control how oil is settled, you eventually influence how it is priced.
The exit infrastructure was being built before it was needed. Then Iran closed the Strait.
The Proof of Concept
On February 28, 2026, the United States and Israel began strikes against Iran targeting its nuclear and ballistic missile program. Iran’s Supreme Leader was killed. Iran launched counter-strikes and closed the Strait of Hormuz.
The Strait carries roughly a fifth of the world’s oil and gas trade.
Since mid-March 2026, the Islamic Revolutionary Guard Corps has charged ship operators up to $2 million per vessel to transit the strait. Payment accepted in Chinese yuan, routed through Kunlun Bank via CIPS, outside SWIFT, or in Bitcoin.
On May 27, 2026, the same day the BIS announced Agorá’s progression, the US Treasury designated Iran’s so-called Persian Gulf Strait Authority as a sanctions target.
The designation is the limit of what the US can do. It cannot block yuan-denominated transactions running through the Chinese banking infrastructure without sanctioning China itself. The alternative rails are no longer being tested in simulations. They are moving money through the most strategically important waterway on earth, in an active conflict, in a currency the United States cannot block.
Every successful yuan-denominated transaction that clears outside the dollar system is simultaneously a technical proof of concept and an institutional precedent. It normalizes non-dollar settlement. It lowers the cost of the next transaction.
The Expansion
mBridge is not staying where it is. With India chairing BRICS in 2026, there is a formal proposal to link the central bank digital currencies of member nations for cross-border trade and payments. That would connect China, Russia, India, Brazil, South Africa, the UAE, Saudi Arabia, and others. Roughly half the world’s population. Roughly a third of global GDP.
A parallel global monetary infrastructure. Not theoretical. In construction.
On the other side, Agorá is adding participants and moving toward real-value transactions. Two systems are expanding toward each other.
What This Means For Your Money
The outcome of this contest is not abstract. It lands differently depending on who wins.
If Agorá wins
The dollar remains the dominant reserve currency. The US keeps its ability to enforce sanctions. Western compliance rules stay embedded in global trade. But your borrowing costs still rise. Agorá is a multi-currency system designed to settle trade in local currencies, gradually reducing the volume of transactions that require the dollar as an intermediary. Even a Western win softens the structural demand that has kept American borrowing cheap for decades. The dollar remains dominant. It becomes less indispensable. That difference is felt slowly, then all at once
If mBridge wins
The consequences land on your kitchen table. Foreign governments no longer need dollars to settle trade. Demand for US Treasuries falls. The government pays more to borrow. Higher Treasury yields mean higher mortgage, auto, and credit card rates. The dollar weakens. Imports become more expensive. Inflation becomes harder to control. And there is a deeper consequence: Beijing’s compliance rules become the architecture of global trade. Not Washington’s. Not Brussels’. Beijing’s. Every cross-border transaction runs on Chinese infrastructure and is shaped by Chinese political conditions.
If neither wins outright
This is the most likely scenario. Two systems run in parallel, each dominating its own bloc. That fragmentation is itself a loss for dollar dominance. A monopoly on financial infrastructure is becoming a duopoly. American leverage declines even without a decisive Chinese victory. Your borrowing costs rise either way. The question is by how much and over how long.
Here is what neither official narrative will say plainly: Agorá and mBridge are not opposites. They are not freedom versus control. There are two versions of the same thing: money that executes rules automatically before a transaction is permitted, without human review or appeal. The difference is only in which rules get encoded. The dollar’s dominance was never purely political. It was infrastructural. What is being contested now is the infrastructure of the next century. Not with armies. With rails.
What You Can Do
Read past the diplomatic headlines at the 18th BRICS Summit, September 12 and 13, 2026, in New Delhi. A formal proposal is on the table to link the CBDCs of member nations. If adopted, mBridge becomes the payment backbone of a bloc representing roughly half the world’s population. It will be covered as a diplomatic event. It is a monetary one.
Watch for the OCC’s finalization of GENIUS Act implementation rules. Federal agencies had until July 18, 2026, to complete most required rulemakings under the Act, with full implementation taking effect January 18, 2027. The rules currently being written determine which compliance architecture is embedded in American consumer payments. The Treasury’s comment period on state-level stablecoin regimes closed June 2, 2026. Most people did not know it was open. The next opportunity to comment will come when the OCC finalizes its rules. Watch for it. Comment when it does.
Watch Agorá move from simulation to real money. The BIS has not announced a date. When it does, the announcement will not say “we are embedding programmable compliance into the architecture of global finance.” It will say “we are improving cross-border payment efficiency.” Those are the same sentence.
This article is part of the research behind Aware Trade: The Rise of Coercive Capitalism, a forthcoming book on programmable money, artificial intelligence, and the fight for a human future. If you want to be notified when the book is ready, subscribe below.
Sources
Institutional and Government
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Bank for International Settlements. mBridge: Exploring Multi-CBDC Arrangements for Cross-Border Payments. 2024. bis.org.
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Legislation and Regulation
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BRICS and Expansion
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