JP Morgan Insists U.S. Dollars Global Sovereignty Is In A Though Position
JPMORGAN insists the central bank digital currencies (CBDC) pose a grave threat to the hegemony of the dollar.
According to reports from Bloomberg, the central bank’s chief economist said,“[t]here is no country with more to lose from the disruptive potential of digital currency than the United States.”
The report further suggested that “this revolves primarily around U.S. dollar hegemony. Issuing the global reserve currency and the medium of exchange for international trade in commodities, goods, and services convey immense advantages.”
Although JPMorgan doubts any entity will displace the dollar as the global reserve currency, the report hints that there are certain aspects of the currency’s dominance that may be eliminated, such as the SWIFT messaging system and trade finance.
In the past three months, 8 leading banks in the country announced a partnership to develop blockchain trade finance that will see a launch in Singapore later this year.
Trade finance initiatives based on blockchain have also been launched in parts of Europe, Oman, and China.
Making The Dollar Digital
The Bloomberg report further suggests that the U.S will launch a digital dollar in order to take its financial dominance into the developing digital world.
However, JPMorgan foresees other nations using digital currencies to circumvent the SWIFT system and reaching economic sanctions, thus negating the U.S.’ ability to exercise power on a global scale via control over the global reserve currency.
“Offering a cross-border payment solution built on top of a digital dollar would, particularly if designed to be minimally disruptive to the structure of the domestic financial system, be a very modest investment to protect a key means to project power in the global economy,” the report said.
CBDCs Versus Cryptocurrencies
Economist John Vaz offered a response to the ongoing battle between CBDCs and cryptocurrencies. He argued that CBDCs are “a kind of rearguard action being fought by the central banks because they don’t like cryptocurrency.”
He further argued that cryptocurrencies negate the actions of central banks “to pull a lever in the economy because, under things like Bitcoin, you can’t create money by way of credit.”
He concluded by saying, “Central bank digital currencies are probably more about tracking money than providing benefit.”
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