I started to write a reply, but then realised it had grown to the length of a full post, so here it is !
Image by Gerd Altmann from Pixabay
Currencies for People and States
Although often denominated in the same terms, there's a difference between the way people see money and states see it. For ordinary people, it's a means of exchange or a way to store value (hopefully earing enough interest while stored to offset inflation !). For states, money is a political tool, used internally to socially engineer their country into a form the rulers want, and externally to control international trade and as a weapon in international relations.
I'm beginning to wonder if we'll start to see a disconnect between government-issued fiat (and CBDC's) and what citizens actually use as a medium of exchange between themselves. Most people will go along with the increased digitisation of money and the move to a cashless society.
But a significant number will move over to using money that isn't government issued, monitored or controlled (or probably have to use both side by side). I expect a majority of this will by crypto, which may spur increased adoption of privacy coins. But at a local level I can also see that people will set up barter schemes or use physical banknotes privately among themselves instead of handing them back to central banks when they are discontinued. When it comes down to it, money is just a token representing a value that people agree among themselves.
The Fall of the US Dollar
For most of the last few hundred years, there has been some kind of global reserve currency, although the accepted coin has changed a few times depending on which empire has been dominant. The most recent has been the US Dollar, but that may be starting to change.
Part of the reason is that the Federal Reserve's fiscal policies have kept the dollar strong compared to other currencies. This works for an America which now imports more finished goods than it exports, but can have a negative impact on the economies of other countries as their currencies devalue and their dollar-denominated sovereign debt becomes less affordable.
When the conflict in Ukraine started, the US and it's allies cut Russia off from SWIFT and froze government reserves held overseas (a figure of somewhere between $300 and $600 billion, depending on who you believe) as well as significant amounts of private citizens money, they demonstrated that the US Dollar was not safe as a global reserve currency.
BRICS and SCO countries are de-dollarising at a rapid rate to reduce the perceived risk; effectively they are learning on a national level what we in crypto space have known for years, that it's not your money if someone else controls access to it.
Alternatives to the US Dollar
A lot more international transactions are now being done in local currencies; rubles, rupees, yuan etc. We'll know that the dollar really has stopped being the single global reserve currency when Saudi Arabia sells oil to China in yuan or riyals. But already, Russia is insisting on payment in rubles for hydrocarbon sales to countries it deems as unfriendly.
Russia's SWIFT-alternative SPFS hasn't really gone mainstream, which suggests to me that there's no appetite to replace SWIFT with a direct equivalent that's just under different control, particularly when countries would have to choose one or the other and thus commit themselves politically.
A Crypto Option
International trade at an individual and small business level is becoming increasingly complex. Payment processors and internaitonal couriers are dramatically increasing the compliance information they require, as they seek to mitigate the risk of breaching any of a complex web of unilateral sanctions from various nations or being caught up in secondary sanctions.
This creates a huge opportunity for crypto to be used as a payment service between small businesses and individuals, and I expect to see stablecoins and the largest cyrypto's (BTC, ETH etc) leading the way.
For larger trades and at a governmental level, the growing mess of using native currency pairs is unlikely to be sustainable in the long term. It is possible that the yuan will just replace the dollar as the main global reserve currency, but I see little appetite for that because the yuan's value is widely perceived to be artificially manipulated.
But blockchain may well have the solution. Whether as the digital manifestation of a single global reserve currency or a single crypto token emerging as a neutral store of value, I can see a blockchain working with smart contracts working as an international escrow system. This way, countries would hold their own reserves without the risk of confiscation, and the smart contracts would free escrow payments when the mutually agreed terms were met.