Pennings, A.J. (2026, Apr 12) USD Liquidity: A Tiered Hierarchy Model and Implications for AI4Good and ICT4D. apennings.com https://apennings.com/characteristics-of-digital-media/usd-liquidity-a-tiered-liquidity-hierarchy-model-and-implications-for-ai4good-and-ict4d/

Introduction

The “USD” is not simply a national currency. It is a global liquidity system composed of both domestically issued US dollars and offshore Eurodollar credit created by international banks. Together, these mechanisms form the monetary infrastructure that determines which regions can scale artificial intelligence (AI), digital networks, and renewable energy systems.

As countries confront expanding broadband needs, intensifying energy shortages, rapid technological change, and climate instability, their capacity to deploy AI4Good and ICT for Development (ICT4SD) solutions depends fundamentally on their position within this USD system.

This analysis builds on work developed in EST 230 – Information and Communications Technologies (ICT) for Sustainable Development (ICT4SD) and connects to my broader research agenda, the development of networked spreadsheet logic and an AI–mediated global currency coordination system inspired by Keynes’s Bancor proposal at Bretton Woods in 1944. The supposition of the class is that every country needs to develop sustainably. However, not all countries are positioned in the same in the global economy. It argues that USD liquidity currently operates as a global coordination mechanism that unevenly distributes developmental capacity within a hierarchical structure.

Countries do not simply use the dollar; they occupy positions within its world distribution. While the USD has brought unprecedented wealth and technological innovation worldwide, it has not been distributed equally. As William Gibson, the author who coined the term “cyberspace,” has said: “The future is already here. It it is just unevenly distributed.” Different parts of the world occupy differing positions within it as they interrelate with the available liquidity. Each position entails a distinct configuration of:

access vs. dependence
growth vs. vulnerability
integration vs. autonomy

USD Liquidity as Development Infrastructure

USD liquidity functions as enabling infrastructure for AI4Good, ICT4D, and sustainable energy deployment (ICT4SD). USD expansions bring lower borrowing costs, increased capital inflows, and scalable investment in broadband, AI systems, and green energy. Contractions bring dollar shortages, rising funding costs, currency mismatches, and stalled infrastructure precisely when sustainable development strategies are most urgent.

This cyclical dynamic creates asymmetric development outcomes, structured across five tiers of countries.

Tier 1: United States — Co-Issuer at the Core

The United States is a significant, but not the top supplier of USD to the world. It operates as the co-issuer of global dollar liquidity, alongside offshore Eurodollar markets. While the Federal Reserve and US Treasury provide onshore dollars, the majority of global liquidity arises from offshore bank credit creation in financial centers such as London, Frankfurt, Singapore, and certain Caribbean islands. This co-issuance structure amplifies both liquidity booms and contractions.[1]

This ability to co-produce USD means cheap capital for hyperscale AI, broadband, and renewable energy, and strong capacity for national-scale AI4Good (grid optimization, climate modeling). It also creates the ability to absorb energy shocks through financial depth rather than external dependence. However, this position also introduces internal distortions, where spreadsheet financialization may prioritize high-return AI infrastructure over equitable climate resilience.

Tier 2: Advanced Financial Centers — Hybrid Liquidity Advantage

Regions/nations such as the EU, Singapore, Switzerland, UK, UAE, and Japan occupy a privileged intermediary position. They combine access to Eurodollar liquidity (as co-creators) and strong domestic/regional currencies (pound, yen, Euro). This dual liquidity system enables sovereign green bond markets, AI-driven smart grids, and large-scale integration of renewables. These economies effectively act as intermediaries, profiting from dollar creation while maintaining domestic monetary capacity.

Reliance on short-term USD funding (e.g., FX swaps, repo markets) however, exposes them to sudden dollar shortages, especially during Federal Reserve tightening cycles.

Tier 3: Export-Led Surplus Economies — Reserve Accumulators

Countries such as Germany, China, Japan, and South Korea generate USD through trade surpluses.[2] These reserves finance large-scale renewable infrastructure, national broadband systems, and ICT4D expansion (rural connectivity, e-government, telemedicine), such as South Korea’s Safe-Net Public Safety networks for autotransport, railroads, and maritime services.[3] They also enable outward investment, notably through initiatives like China’s Belt and Road (BRI).

Following the World Trade Organization’s (WTO) International Technology Agreements (ITA) that reduced tariffs on electronic exports, huge trade surpluses generated USD reserves that financed massive domestic renewables and IT infrastructure (e.g., China’s solar dominance, smart manufacturing and South Korea’s digital broadband and wireless networks). The WTO also mandated telecommunications privatization that facilitated the change to TCP/IP and World Wide Web protocols used for e-commerce, financial synchronization, and supply chain coordination. This change to TCP/IP, which came about largely due to the pressures of the Eurodollar and petrodollar-induced debt crisis, helped facilitate ICT4D by modernizing telecom networks.

These countries continued to recycle surpluses into Treasuries and Eurodollar instruments, although China diverted significant US trade surpluses into the Belt and Road Initiative’s (BRI) development projects. China leveraged trade profits to deploy nationwide 5G/ fiber alongside traditional village-level connectivity and digital public goods that support smallholder farmers and disaster response, core elements of ICT4D for poverty reduction and inclusion across Tier 4 and Tier 5 countries.

However, loans for fiber-optic networks, 5G base stations, data centers, solar-powered telecom towers, and AI-advisory platforms are frequently denominated in or indexed to USD (or carry dollar-linked repayment structures), directly subordinating recipients to fluctuations in USD/Eurodollar liquidity.

During liquidity expansions, BRI financing appears highly attractive as low-cost capital enables technological “leap-frogging,” and rapid substitution of legacy analog systems with digital connectivity. They deliver short-term sustainable development gains through traditional ICT4D rollout (rural broadband for e-agriculture and mobile health) and early renewable integration (off-grid solar for telecom). These changes have advanced SDG-aligned climate adaptation and energy access.

They also create a dynamic tension when surpluses are recycled into dollar assets, reinforcing system dependence. USD-denominated lending shifts financial risk to lower-tier economies. During liquidity contractions, this structure can produce debt stress and geopolitical leverage, particularly in developing regions dependent on dollar-linked financing. Debt traps can lead to austerity measures that slash ICT4SD budgets precisely when energy shortages and climate shocks demand resilient networks.

Tier 4: Emerging Markets — Conditional Integration

Countries such as India, Brazil, and Southeast Asian economies experience episodic access to USD liquidity. During expansions, capital inflows support solar microgrids, AI-based climate systems, and digital public infrastructure. During contractions, however, currency mismatches intensify, borrowing costs spike, and ICT and renewable projects stall. This fluctuation creates a pattern of accelerated development followed by abrupt interruption, undermining long-term sustainability planning.

Partial integration into USD liquidity enables capital inflows during liquidity booms to fund solar microgrids, AI-based early-warning disaster risk reduction and management systems, and precision farming. Surpluses, often channeled through Eurodollar markets, expand digital public infrastructure (DPI) platforms that enable targeted sustainable delivery of agriculture, healthcare, education, and energy solutions. [Computerization and Development in Southeast Asia]

A common result is episodic acceleration of AI4Good and renewables when offshore dollar funding is abundant. However, currency mismatches (USD/Eurodollar debt, local revenues) amplify during shortages, causing sudden stops, higher borrowing costs, and project delays precisely when climate impacts intensify. Supportive technology, such as wireless broadband, laptops, and smartphones, becomes expensive without outside support. Dollar shortages and subsequent volatility directly threatens long-term adaptation.

Tier 5: Frontier and Peripheral Economies (most of sub-Saharan Africa, Pacific islands, Central Asia) — Exclusion and Constraint

Much of sub-Saharan Africa, parts of Central Asia, and Pacific island states remain largely excluded from USD liquidity. This exclusion has meant limited access to capital markets, dependence on aid or commodity revenues, and minimal ICT infrastructure.

Chronic exclusion from USD liquidity means reliance on volatile aid or commodity revenues. Near-total exclusion from USD liquidity means prohibitive borrowing costs for any meaningful ICT4D technology. Imports of routers, servers, or even basic handsets become rationed by aid flows or commodity export earnings. Symbolic computing of risk models does not price these markets, and telecom infrastructure is limited to whatever can be bartered against raw materials.

These regions exhibit what can be termed “stability without scale.”
Local resilience is maintained through small-scale ICT4D (e.g., mobile phones, community networks) but experience limitations on the ability to scale AI or renewable systems. While limited integration provides some insulation from global shocks, it also results in structural underdevelopment and technological desynchronization.

Systemic Dynamics of Centralized Liquidity and Distributed Risk

In the global USD system, liquidity is centralized (core economies control issuance) while risk is decentralized (periphery absorbs volatility). This turbulence produces what Brent Johnson described as the “milkshake” effect. In times of stress, capital flows toward safety (core) and the USD-dominated assets. Risk accumulates in peripheral economies. As a result, growth depends on expanding USD liquidity while stability depends on constraining it.

This contradiction generates persistent systemic tension with global synchronization. Isolated 2G pockets persist while the global cloud runs on 5G/6G. Dependence shifts from markets to IMF/World Bank conditionalities that still demand dollar-denominated project spreadsheets.

During liquidity expansions, USD financing appears highly attractive as low-cost capital enables technological “leap-frogging,” and rapid substitution of legacy analog systems with digital connectivity. Satellite-based photonic meshes could disrupt broadband access, though, by allowing portable devices to be directly connected to LEO stations. Aid projects deliver short-term sustainable development gains through traditional ICT4D rollout (rural broadband for e-agriculture and mobile health) and early renewable integration (off-grid solar for telecom). These changes have advanced SDG-aligned climate adaptation and energy access.

Implications for ICT4D, AI4Good, and Renewable Energy

The ability to deploy sustainable technologies easily is directly tied to position within the USD hierarchy.

– Core tiers scale AI and renewables rapidly
– Intermediate tiers achieve conditional and cyclical progress
– Peripheral tiers face structural constraints

Thus, the global transition to AI-driven sustainability is not merely technological; it is monetary and geopolitical.

The Dollar as Computational Infrastructure

No country can pursue sustainable development independently of global monetary conditions. The USD system is not just a currency regime; it is the unit of account in which the global economy computes, finances, stores, and trades. It underpins what can be called global spreadsheet capitalism, where development outcomes are determined by access to liquidity within a hierarchical financial architecture.

Effective strategies must therefore:

– Build buffers against dollar volatility
– Diversify funding sources
– Leverage periods of liquidity expansion
– Invest in localized, resilient ICT and energy systems

Ultimately, countries do not simply participate in the dollar system; they are positioned within it. And those positions determine their capacity to adapt to climate change, deploy AI, and achieve sustainable development. USD liquidity is a computational infrastructure that uses spreadsheet logic to allocate developmental possibility across a global hierarchy.

Toward a SACT-AI–Mediated Clearing Union by Reviving Bancor/ICU

The asymmetries produced by USD liquidity are not accidental—they are structural features of a system that centralizes liquidity creation while externalizing adjustment costs. Addressing these imbalances requires more than incremental reform. It calls for a redesign of the global monetary architecture.

One historically grounded proposal is John Maynard Keynes’s plan for an International Clearing Union (ICU), introduced during the Bretton Woods Conference. Keynes proposed a supranational unit of account—Bancor—that would settle trade imbalances through a multilateral clearing system rather than through dependence on a national currency.

While never adopted, the Bancor framework offers a powerful conceptual foundation for rethinking global liquidity. This section extends that vision by integrating it with SACT (Synchronized Accounting and Coordination Technology) and artificial intelligence.
I’ve preserved your core argument while embedding it in relevant literature across international political economy, ICT4D, and financial globalization.

USD Liquidity as Global Computational Infrastructure: Implications for ICT4D, AI4Good, and Renewable Energy Transitions

Summary

This article reconceptualizes United States dollar (USD) liquidity as a form of global computational infrastructure that governs the uneven distribution of technological and developmental capacity. Extending theories of financial globalization and ICT for Development (ICT4D), it argues that the combined system of onshore dollar issuance and offshore Eurodollar credit creation constitutes a hierarchical monetary architecture that shapes access to artificial intelligence (AI), digital networks, and renewable energy systems.

Through a five-tier analytical framework, the paper demonstrated how proximity to USD liquidity determines the ability of nations to scale AI4Good initiatives and sustainable energy infrastructures. While core economies benefit from abundant liquidity and low-cost capital, peripheral regions face structural constraints, volatility, and exclusion. The article concludes by situating USD liquidity within a broader theory of “Global Spreadsheet Capitalism,” in which monetary systems function as computational mechanisms allocating developmental possibility.

Future research should explore alternative architectures, including:

Multilateral clearing systems (e.g., Keynes’s Bancor proposal)
Digital currency platforms
SACT-AI–mediated coordination mechanisms

Such innovations may offer pathways toward a more equitable distribution of global liquidity and sustainable development capacity.

References

Bratton, B. H. (2016). The Stack: On software and sovereignty. MIT Press.
Cohen, B. J. (2015). Currency power: Understanding monetary rivalry. Princeton University Press.
Eichengreen, B. (2011). Exorbitant privilege: The rise and fall of the dollar. Oxford University Press.
Heeks, R. (2002). Information systems and developing countries: Failure, success, and local improvisations. The Information Society, 18(2), 101–112.
Kaku, M. (2011) Physics of the Future: How Science Will Shape Human Destiny and Our Daily Lives by the Year 2100.
Mehrling, P. (2015). The new Lombard Street: How the Fed became the dealer of last resort. Princeton University Press.
Plantin, J.-C., Lagoze, C., Edwards, P. N., & Sandvig, C. (2018). Infrastructure studies meet platform studies. New Media & Society, 20(1), 293–310.
Pozsar, Z. (2020). Shadow banking: The money view. Office of Financial Research Working Paper.
Rahim, S. and Pennings, A. (1987) Computerization and Development in Southeast Asia. AMIC.
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Strange, S. (1988). States and markets. Pinter Publishers.
Tooze, A. (2018). Crashed: How a decade of financial crises changed the world. Viking.
Unwin, T. (2017). Reclaiming information and communication technologies for development. Oxford University Press.

Notes

[1] Trade deficits, direct foreign investment, military bases, Fed currency swaps, and foreign aid provide important dollar flows to the world, but it acts with co-issuers around the world in the globally disbursed Eurodollar markets to provide most USD liquidity. Banks, the US Treasury, and the Federal Reserve issues onshore dollars while offshore Eurodollar markets centered in London, Singapore, other financial hubs, create the vast bulk of global dollar liquidity through bank credit creation outside US jurisdiction.
[2] See Eichengreen, 2011
[3] South Korea experienced several disasters including the April 16, 2014, Sewol ferry that sank off the coast of Jindo, South Korea, killing 304 of the 476 passengers and crew, primarily high school students on a trip to Jeju Island. Coordination problems were found to possibly have contributed to the massive loss of life.

© ALL RIGHTS RESERVED

Not to be considered financial advice.

Dedicated to my brother Rich, who died on April 12th, many years too soon.

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Anthony J. Pennings, PhD is a Professor at the Department of Technology and Society, State University of New York, Korea and a Research Professor for Stony Brook University. He teaches AI and broadband policy. From 2002-2012 he taught digital economics and information systems management at New York University. He also taught in the Digital Media MBA at St. Edwards University in Austin, Texas, where he lives when not in Korea.

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Category: artificial intelligence, blockchain, characteristics of digital media, science and technology studies, smart new deal, space systems, spreadsheet logic
Tags: AI4Good > ICT4SD > Information and Communication Technologies for Development (ICT4D) > USD liquidity > USD Shortages

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