Global Central Bank Digital Currency as a Catalyst for the Demise of the U.S. Dollar | BTCMANAGER
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Earlier this week, Mark Carney, the governor of the Bank of England, brought up the idea of a central bank operated digital currency akin to Libra to bring an end to the dominance of the U.S. dollar as the global standard for trade and international hedges. Bloomberg extensively covered the views of various bureaucrats and economists, most of whom believe Carney’s vision would be help global market detach their growth from the United States, August 25, 2019.
Ending the Dollar Regime
This seems like an issue that has only come to the public view in the last few months, but the dollar’s hegemony over global trade has long been an obstacle for emerging countries. Adam Posen, a former policymaker for the English central bank, argues that the dollar still reigns supreme due to its ability to thwart efforts from the likes of the Yuan and Euro.
Central banks have tried to create synthetic baskets of foreign currency reserves instead of relying on the dollar, but this has not been successful due to many operational constraints.
Trump’s tariffs on other countries have given the dollar newfound strength, while simultaneously leading emerging market currencies into prolonged bear markets. The result of this is an inability for smaller countries to bank on changes in their own currency price to even out the damage caused by transacting in a currency that is appreciating against the nation’s currency and assets.