May 25, 2022
What Will Determine the Future of Money?
The international economy is beginning to fracture around the development of novel digital currencies and the human values that their systems represent. Since currencies represent a commonly accepted medium of exchange and can act as an enabler or disabler of economic relationships, they have the power to shape how the global economy functions.
The economic landscape today is evolving rapidly with the emergence of various fiat currencies, central bank digital currencies (CBDCs), and cryptocurrencies that each represent a set of goals or priorities set forth by the issuing body. For example, the US Dollar symbolizes globalization. Bitcoin represents hyper-globalization, with a focus on decentralization and a sprinkle of revolution. The Digital Yuan represents an attempt to track purchases, collect data on consumers, and disconnect a sizable portion of the global economy from the US Dollar.
As diversification occurs, we should expect to see the US Dollar challenged on the global scale.
COVID-19, further discomfort with a US-centric global economy, and the implementation of economic sanctions have ignited isolationist sentiment across the world, leading to the fracturing of interests, values, and leadership. If unchecked, this trend could create an economy that is based on a basket of currencies rather than one that hinges primarily on the performance of the US Dollar/US economy. The growing pains of crypto have not deterred the decentralized finance and creator economy from pursuing a privacy-based system that operates outside of the purview of governments, which helps explain the rise of Monero, Horizen, Railgun, Dash, ZCash, and other so called privacy coins.”
China’s continued push to implement a CBDC that logged over $8 billion in transactions in the second half of 2021 has still not been met with serious pushback from the international community. Israel’s reduction in US Dollar foreign reserve holdings also symbolizes a move away from a US-centric system. These trends denote a larger shift to a diversified world economy, where many types of currency (decentralized and state-issued) live alongside one another.
Read the full article from The Belfer Center.
More from CNAS
-
Red Lines and Supply Chains: Trump’s Approach to Trade and Security
Video
The Trump administration is increasingly linking trade policy to national security. Join Emily Kilcrease, senior fellow and director of the Energy, Economics, and Security Pro...
By Emily Kilcrease
-
Ziemba: Struck By Energy Deal Between India & Saudi Arabia
Video
Saudi Arabia and India have agreed to deepen energy ties and cooperate more closely on tourism and technology as the countries seek to strengthen relations at a time of turbul...
By Rachel Ziemba
-
What is President Trump’s Economic Plan?
Podcast
Global financial markets plunged as investors braced themselves for a shock to the flow of international trade. Faced with prolonged market turmoil, within days the US Preside...
By Emily Kilcrease
-
Bloomberg Businessweek: Age of Economic Warfare
Podcast
Columbia University Senior Research Scholar and adjunct senior fellow at the Center for a New American Security, Edward Fishman on US credibility and how that is affecting its...
By Edward Fishman
