Europe's $24 Trillion Breakup With Visa and Mastercard

upstart writes:

Europe's $24 Trillion Breakup With Visa and Mastercard:

There's a reason every decentralized system eventually finds its way onto a platform: platforms solve real-world problems that platform users struggle to solve for themselves.

Everyone needs platforms: writers, social media users, people looking for a romantic partner. What's more, the world needs platforms. Say you want to connect all 200+ countries on Earth with high-speed fiber lines; you can run a cable from each country to every other country (about 21,000 cables, many of them expensively draped across the ocean floor), or you can pick one country (preferably one with both Atlantic and Pacific coasts) and run all your cables there, and then interconnect them.

That's America, the world's global fiber hub. The problem is, America isn't just a platform for fiber interconnections - it's a Great Power that uses its position at the center of the world's fiber networks to surveil and disrupt the world's communications networks.

That's a classic enshittification move on a geopolitical scale. It's not the only one America's made, either.

Consider the US dollar. The dollar is to global commerce what America's fiber head-ends are to the world's data network: a site of essential, (nominally) neutral interchange that is actually a weapon that the US uses to gain advantage over its allies and to punish its enemies:

The world's also got about 200 currencies. For parties in one country to trade with those in another country, the buyer needs to possess a currency the seller can readily spend. The problem is that setting up 21,000 pairwise exchange markets from every currency to every other currency is expensive and cumbersome - traders would have to amass reserves of hundreds of rarely used currencies, or they would have to construct long, brittle, expensive, high-risk chains that convert, say, Thai baht into Icelandic kroner to Brazilian reals and finally into Costa Rican colones.

Thanks to a bunch of complicated maneuvers following World War II, the world settled on the US dollar as its currency platform. Most important international transactions use "dollar clearing" (where goods are priced in USD irrespective of their country of origin) and buyers need only find someone who will convert their currency to dollars in order to buy food, oil, and other essentials.

There are two problems with this system. The first is that America has never treated the dollar as a neutral platform; rather, American leaders have found subtle, deniable ways to use "dollar dominance" to further America's geopolitical agenda, at the expense of other dollar users (you know, "enshittification"). The other problem is that America has become steadily less deniable and subtle in these machinations, finding all kinds of "exceptional circumstances" to use the dollar against dollar users.

America's unabashed dollar weaponization has been getting worse for years, but under Trump, the weaponized dollar has come to constitute an existential risk to the rest of the world, sending them scrambling for alternatives. As November Kelly says, Trump inherited a poker game that was rigged in his favor, but he still flipped over the table because he resents having to pretend to play at all.

Once Trump tried to steal Greenland, it became apparent that the downsides of the dollar far outweigh its upsides. Last month, Christine Lagarde (president of the European Central Bank) made a public announcement on a radio show that Europe "urgently" needed to build its own payment system to avoid the American payment duopoly, Visa/Mastercard.

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