The growing trend of utilizing the United States dollar and the SWIFT international payment architecture as instruments of geopolitical leverage has catalyzed a profound shift in global commerce. As international trust in the greenback and its associated financial networks wanes due to aggressive economic sanctions, nations across the globe are actively seeking viable alternatives to safeguard their economic sovereignty. This mounting disillusionment with traditional Western-dominated financial systems has brought alternative frameworks—particularly Islamic finance instruments and bilateral trade conducted in national currencies—to the forefront of international economic strategy.
In response to these shifting geopolitical dynamics, Turkish President Recep Tayyip Erdogan has strongly advocated for the broader adoption of Islamic finance principles to navigate the changing global landscape. Highlighting the urgency of the matter, President Erdogan emphasized that trade conducted in national currencies has become an imperative necessity. He asserted that the international community must place the issue of Islamic finance firmly on its collective agenda.
This latest push builds upon previous calls by the Turkish leader urging other nations to dismantle what he has termed the "monopoly" of the dollar in global trade transactions. The concerns raised by emerging market leaders have not gone unnoticed by Western policymakers. US Treasury Secretary Steve Mnuchin previously acknowledged the inherent risks of overusing financial sanctions, admitting that if policymakers are not careful, international actors will increasingly look at utilizing alternative currencies and payment systems to conduct their cross-border business.
Iranian Banks Removed from SWIFT
The catalyst for many of these alternative financial arrangements lies in the severe economic statecraft employed by Washington. The implementation of sweeping US sanctions has effectively removed Iranian banks from the Society for Worldwide Interbank Financial Telecommunication, commonly known as the SWIFT payment system. This exclusion has severely crippled Iran’s ability to conduct normal foreign trade, cutting the nation off from the primary arteries of international finance.
The reach of these secondary sanctions has extended far beyond the Middle East, causing friction even among traditional Western allies. Similar restrictive measures have directly impacted European enterprises, notably affecting German firms that were actively working on the Russian-German pipeline project. Such extraterritorial applications of US financial power have alarmed nations worldwide, demonstrating that even friendly or neutral commercial entities can become collateral damage in broader geopolitical disputes.
Faced with the constant threat of exclusion from Western-centric financial networks, major global powers have begun constructing parallel systems. Notably, Russia and China have successfully established their own independent payment mechanisms. These bilateral arrangements allow Moscow and Beijing to trade directly with one another, effectively bypassing traditional clearing houses and insulating their commercial exchanges from the reach of the US dollar.
Increased Use of Gold and Local Currencies
The movement away from the greenback extends well beyond bilateral arrangements, gaining institutional backing within major multilateral organizations. The Shanghai Cooperation Organization (SCO), an eight-nation security and economic bloc that includes key global players such as China, Pakistan, and Russia, currently represents nearly a quarter of global Gross Domestic Product. Recognizing their collective economic weight, member states of the SCO have systematically increased their gold and foreign exchange reserves, which now accumulate to a staggering total of nearly four trillion US dollars.
This accumulation of robust reserves has provided the economic foundation for a significant policy shift. During a high-level finance ministers’ meeting held in Moscow, the SCO officially decided to transition away from the dollar by conducting bilateral trade and investment entirely in local currencies. By utilizing their own national currencies for mutual trade, SCO members are insulating their economies from exchange rate volatility tied to the US currency and reducing their vulnerability to external financial coercion.
Use of Gold in Islamic Cultures
Parallel to the de-dollarization efforts led by major economic blocs, nations with significant Islamic financial sectors are reviving historical assets to facilitate modern trade. Gold has long remained an attractive asset class and a reliable store of wealth, traditionally passed down through generations within Asian and Middle Eastern cultures. In contemporary times, countries such as Turkey and Malaysia have positioned themselves at the vanguard of Islamic financial gold banking and the development of gold-based currencies.
Practical implementations of this approach can be seen at the regional level. The Malaysian states of Kelantan and Perak notably introduced gold dinar and silver dirham coins as an alternative means of payment and for localized trade. These initiatives reflect a broader cultural and economic preference for tangible assets that hold intrinsic value independent of fiat currency fluctuations.
In the banking sector, commercial institutions have embraced similar innovations. Turkish Islamic bank Kuveyt Türk, known as Kuwait Turkish Bank, pioneered major advancements in this sector by beginning to offer specialized gold banking services in 2007. Through this initiative, the institution successfully collected over 26 tons of gold—valued at approximately 1.2 billion US dollars as of July 2019—and seamlessly integrated those bullion reserves into the wider Turkish economy. Building upon the success of physical gold banking, current modernization initiatives within the sector include exploring Islamic finance gold-based cryptocurrencies to better facilitate secure and efficient cross-border trade without relying on traditional Western correspondent banking networks.
Islamic Finance Gold Standard
The integration of precious metals into modern Islamic finance received a major institutional boost in 2016. During that year, the World Gold Council and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) formally approved a comprehensive sharia standard for gold-based products.
The primary objective of establishing this regulatory framework was to safely increase the utilization of physical bullion within Islamic finance and to pave the way for the creation of innovative financial instruments. The newly established standard meticulously addressed critical operational parameters, including the proper use of collateral, as well as the precise mechanisms required for the exchange of gold in both immediate spot transactions and deferred payment arrangements. By establishing clear, internationally recognized guidelines, this sharia standard has provided the legal and religious certainty necessary for financial institutions to expand gold-backed trade and investment instruments on a global scale.