The USA sees itself as the champion of democracy and freedom in the world.

Freedom to the USA means the right or freedom for the USA to impose what the USA thinks other countries should do on those countries.

The USA consider that every country has to use the US$ for trade and that the USA has the right to control how and who uses the US$.

When 2 Arab countries tried to use other currencies instead of the US$ for the trading of crude oil, the USA pressed for regime change. It supported uprisings that pushed for a change in the leadership of the countries or even got directly in attacks.

The leaders of both Libya and Iraq were overthrown.

One had tried to use currencies like the Euro and the other for the usage of a gold backed dinar.

The gold backed dinar would not be just used for oil trade but had the potential to be used for global trade and could have been a real threat to the US$.

Following the Bretton Woods Agreement, the US$ remained as a gold backed currency, while all other currencies no longer needed to be backed by gold directly.

Instead, the other currencies were partially backed indirectly by gold by being backed with the US$.

Thus the US$ became solidly enthroned as the world trade currency and the world reserve currency.

The other countries of the world held US$'s and US treasuries (Bonds issued by the USA)  as their foreign reserves to back their own currencies.

This worked until 1971.

The USA was living above its means on borrowed money because foreign countries were buying US treasuries.

Because the US$ is partially backed by gold, foreign governments could exchange their US$ for gold.

This led to the outflow of gold from the USA to other countries. The USA was spending so much money for the Vietnam war that its deficit and outflow of gold became a serious problem.

President Nixon took the US$ off gold and it was no longer backed by gold.

All the currencies of the world became fiat currencies.  Currencies that are not backed by hard assets like gold but currencies that have value only because of confidence or faith of 👬👫.

Taking the US$ off gold allowed the USA to print the US$ in unlimited quantities.

The USA became able to live above its means on a greater scale and amplified the "Wealth Effect". There is so much money that Americans can spend that Americans lived under a false sense of economic well being and feeling that they are wealthy because they were living on money borrowed from foreign countries.

The USA which was the Largest Creditor Nation that lends to other nations eventually became the Largest Debtor Nation of the world or the nation that owes other countries the most in terms of value.

In order to protect its position as the world trade currency and world reserve currency, the USA struck a deal with Saudi Arabia which was like the leader of the Arab countries. In return for protection by the USA, all oil trade had to be conducted in US$.

This became known as the Petrodollars because the US$ was sort of "backed" by crude oil while the currencies of other countries continued to be backed by the US$.

The proposals by Libya and Iraq was a serious threat to the Petrodollar.

In order to protect its position as the world trade currency and world reserve currency, the USA struck a deal with Saudi Arabia which was like the leader of the Arab countries. In return for protection by the USA, all oil trade had to be conducted in US$.This became known as the Petrodollars because the US$ was sort of "backed" by crude oil while the currencies of other countries continued to be backed by the US$.The proposals by Libya and Iraq was a serious threat to the Petrodollar.What is even worse is that the gold backed dinar will become the only currency in the world that is officially backed by gold.

This could have led to a shift of foreign reserves to the gold back dinar.This is very dangerous for the USA and could lead to it losing its status as the World Reserve Currency.

If this happens, Americans will no longer be able to enjoy the Wealth Effect and live above their means. Foreign countries will stop or slow down lending to the USA
The USA used its might to ensure that the gold backed dinar failed. However to this day traces of what was attempted can still be seen.

Dinar is still being used as a measure of gold as an alternative to grams or Troy ounces. Gold coins measured in terms of Dinars are still being bought and sold especially in Islamic countries.

Fast forward to the current situation. 

The US$ and Swift is being weaponised against other countries.

Most of the world's trade is still conducted in US$. Banks use Swift to make settlements of inter country payments. If payments are to be made in other currencies, the payment is converted to $'s for settlement amongst participating banks.

By excluding countries and their banks from using Swift, they are dealt a heavy blow.

It is difficult to trade and to make or obtain payment.The level of trade is reduced and countries sanctioned by being excluded from Swift is hurt economically.

This is not the first time Russia is being sanctioned.

During the previous round of sanctions against Russia, it traded with China using their own currencies.

CIPS was developed to enable the settlement of trade between the two countries.

At the moment only a tiny percentage of inter country settlements is done through CIPS compared to Swift.

If countries are excluded from Swift,what choice do  they have but to use CIPS?

Cryptocurrencies is a possibility but that is another story outside the scope of this post.

The proposed Act in the USA is to sanction any banks that uses CIPS and exclude those banks from Swift.

Is the USA going too far?

It stop people from using Swift and then try to prevent people from using alternatives to Swift. Any party though not originally sanctioned will become sanctioned if they used CIPS.

What right does the USA have to say that China and Russia cannot trade with one another?

The post below about the Curb Swift Act 2022 is taken from the site "Silk Road Briefing"The Act is still going through the process and has not been passed yet.