Transnational Thursday is a thread for people to discuss international news, foreign policy or international relations history. Feel free as well to drop in with coverage of countries you’re interested in, talk about ongoing dynamics like the wars in Israel or Ukraine, or even just whatever you’re reading.
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It is understandable that they may have different interests than the US, and thus want a monetary system that can not be controlled by the US. The question is, who will be controlling it then? Somehow I doubt it being controlled by Zambia or South Africa or any other African state would be better for the long-term perspectives of it, and in general African states - especially ones that are located close and thus most in need of common currency system - aren't best known for always valuing cooperation over conflict. Of course, they could elect China or Russia or Iran to be their master - but why exactly would that play better for them than the US?
They could try to implement a truly decentralized zero-trust system, but given as nobody really done it on the national scale, I'm not sure they have the expertise or the guts to try it. Would be an interesting experiment though, but there are so many failure modes there that it could only be of any value if successful.
That sounds horrendously expensive. I wonder is that because of the risks? Then of course homegrown systems would be cheaper - by just ignoring the risks, until the next rugpull.
This is just a payment-processing system, not a whole new currency.
PAPSS's governing council appears to be populated by the top officials of the central banks of its member countries. PAPSS operates under the auspices of the African Export–Import Bank, whose board of directors likewise is composed of various central banks' top officials.
Yes, but if the processing system uses dollars and US banks (or banks that eventually connect to US banks) then US can control it. Dealing with a ton of different currency without having an intermediary one where you can align everything to the single common measure could be challenging...
Yes, of course, but what happens if there is a conflict between them? Say, one government has a lucrative trade in goods that are frowned upon by other governments, and wants to use this system to facilitate it? What if two members have a fight and try to block (or steal) each other's payments?
The other point is that if the actors using the system also want to use dollars and US banks separately, the US can still influence it. This is why the attempted Iran-EU exchange program died after the JCPOA fell apart. The Europeans mooted building what would basically have been shell companies to serve as intermediaries who would never touch dollars for Iran-EU trade, and the US simply moved the threat of secondary sanctions to any European companies that did work with the shell companies doing work with Iran.
This is part of the classic misunderstanding of the influence of the dollar in the international system. It doesn't actually matter if you use dollars in the transaction. Dollars are just a lower transaction cost medium of exchange, but everyone already had the ability to pay a higher transaction cost if they wanted to do currency swaps and such. What matters if you also, elsewhere, want to do business with the dollar system.
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The linked PAPSS page mentions bylaws, but they do not appear to be posted publicly. Afreximbank's charter (art. 17) states that a dispute between the bank and a member is resolved by a vote of the shareholders (i. e., the members), while a dispute between the bank and a former member is resolved by arbitration.
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