Implications of Egypt–China Abandoning SWIFT for CIPS.

This image and tweet report that Egypt and China’s central banks have agreed to abandon the SWIFT system and instead conduct bilateral trade using local currencies via China’s Cross-Border Interbank Payment System (CIPS). This move has significant geopolitical and economic implications, especially considering Egypt’s historical alignment with the United States and the dominance of the U.S. dollar (USD) in global trade.

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🧭 Implications of Egypt–China Abandoning SWIFT for CIPS

1. De-Dollarisation Gains Momentum

The most direct implication is a challenge to the dominance of the U.S. dollar in international transactions:

• SWIFT is a messaging system that facilitates global financial transfers, dominated by USD transactions.
• CIPS is Beijing’s alternative system to reduce dependence on SWIFT and the dollar.
• Egypt’s decision signals growing confidence in the yuan (CNY) and multipolar trade alternatives.

2. A Strategic Shift by Egypt

Egypt is traditionally a U.S. ally, receiving military aid and diplomatic backing. But this shift indicates:

• Cairo is diversifying its economic alliances, moving closer to China and potentially BRICS.
• This might be driven by frustration with U.S. financial restrictions or the desire for greater financial autonomy.

3. Risks of U.S. Sanctions or Retaliation

Former U.S. President Donald Trump and others have warned of sanctions or economic consequences for countries that bypass the dollar. Possible outcomes:

• U.S. could impose secondary sanctions on entities using CIPS, similar to what it has done to Iran or Russia.
• Foreign aid, loans, or trade benefits to Egypt might be reduced.
• Egypt might face political pressure from Washington and its allies.

4. Strengthening of China’s Global Financial Architecture

China’s success in convincing nations to adopt CIPS and local currency trade strengthens its push to:

• Internationalise the yuan.
• Undermine U.S.-led financial dominance.
• Promote an alternative world order centred around China and BRICS+ partners.

5. Influence on Other Countries

Egypt’s shift might inspire other African, Arab, or Global South nations to consider ditching SWIFT or reducing reliance on the USD. This would:

• Accelerate the fragmentation of global finance into Western (USD/SWIFT) vs. Eastern (CNY/CIPS) blocs.
• Pressure multilateral financial institutions (IMF, World Bank) to adjust policies.

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🧨 Strategic Risks & Benefits for Egypt

✅ Pros

• Less dependence on U.S. financial systems and sanctions.
• Better trade terms with China (e.g., Belt and Road projects, investment).
• More control over foreign reserves and monetary policy.

❌ Cons

• Potential loss of U.S. support, aid, or trade advantages.
• Increased scrutiny from Western financial systems.
• Risk of economic volatility during the transition.

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🔚 Conclusion

Egypt’s decision to abandon SWIFT in favour of CIPS with China is a bold step toward de-dollarisation, signalling a shift in global financial alignments. While this may bring economic flexibility and stronger ties with China, it also risks alienating traditional Western allies, especially if U.S. policymakers like Trump return to power and enforce punitive measures.

This move illustrates the growing cracks in U.S. dollar hegemony and marks another step in the rise of a multipolar global financial system.