Clash of Empires: Currencies and Power in a Multipolar World

Empires usually start off as road-building exercises. Which explains why, in Europe, everyone says that “all roads lead to Rome”.

The reason empires like to build such arteries is to pull in commodities cheaply to the heart of the empire, and push out, at minimal cost, higher value-added finished goods to the periphery.

With this analogy in mind, the world seems to increasingly be splitting along three empires:

• The USA with its protectionist and isolationist president

• Europe, whose territorial expansion seems to have stalled at the borders of Russia.

• China, with its “One Belt, One Road” ambitions, a thinly disguised plan to tie Eurasia and Africa into China’s economic orbit.

Clearly, Xi Jinping is on an imperial kick and, for him, in the 21st century, all roads must lead to Beijing.

But building roads is the easy part of any imperial roll-out.

Once the roads have been built, the safety of the goods and people travelling along them has to be ensured without creating resentment.

Moreover, the empire must decide in which currency trade is taking place.

Can China remain dependent on the willingness and ability of the American banks and government to fund its imperial ambitions ?

Besides the fact that building an Empire on somebody else’s dime makes no sense, in the past couple of decades (Asian crisis of 1997, mortgage crisis of 2008, Taper Tantrum of 2013…), American banks have shown repeatedly that they were not reliable partners when it came to funding Asian trade. To be credible, an Empire must have its own reserve currency.

The aim of this book is to think through the consequences of a world which increasingly seems to be splitting up into three zones, each with its own reserve currency, its own fiscal policy, its own ambitions and perhaps even its own supply chains.

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