{"id":261692,"date":"2020-05-23T18:59:29","date_gmt":"2020-05-23T22:59:29","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=261692"},"modified":"2020-05-23T18:59:29","modified_gmt":"2020-05-23T22:59:29","slug":"jpmorgan-warns-that-cbdcs-could-erode-dollars-global-monetary-dominance","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/jpmorgan-warns-that-cbdcs-could-erode-dollars-global-monetary-dominance","title":{"rendered":"JPMorgan Warns that CBDCs Could Erode Dollar\u2019s Global Monetary Dominance"},"content":{"rendered":"
American investment banking giant JPMorgan is weighing in on the topic of Central Bank Digital Currencies (CBDCs), as the firm believes that they could pose a threat to the dollar.<\/span><\/p>\n Yesterday, Bloomberg published a <\/span>report<\/span><\/a> from some of the Wall Street giant\u2019s top economists and analysts. In it, the financial experts explained that the proliferation of CBDCs could necessarily mean the end of the dollar as the dominant global currency.<\/span><\/p>\n The bank\u2019s report covered some of the broader implications of CBDCs, including their propensity to facilitate international trade and the exchange of commodities and services. As the analysts explained, the United States could lose the most from allowing these assets, as they could undermine the hegemony of the dollar.<\/span><\/p>\n While they expressed doubts over the possibility of a single CBDC replacing the dollar as the global reserve currency, they did warn that state-backed digital assets could hamper several other infrastructures that depend on the dollar.<\/span><\/p>\n As they posited, the likely top victims are international trade finance and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system.<\/span><\/p>\n Several regions have flirted with the idea of developing encompassing digital assets that will help improve trade and stabilize their individual economies. If this happens, countries therein could reduce their reliance on the dollar for making transactions.<\/span><\/p>\n Earlier this week, the Central Bank of France <\/span>announced<\/span><\/a> that it had successfully tested a digital Euro. As the bank explained, the asset will focus more on institutional and wholesale purposes.<\/span><\/p>\n There\u2019s every indication that further success could see the bank expand the asset\u2019s use, in terms of functionality and coverage across the Eurozone. The Dutch Central Bank already <\/span>committed<\/span><\/a> to a possible Europe-wide digital asset.<\/span><\/p>\n The firm also warns that several other countries could use digital currencies to bypass the SWIFT system and several economic sanctions that hinge on access to the system. This is a present possibility in countries like South Korea, China, and Iran rumored to be working on state-backed assets.<\/span><\/p>\n JPMorgan explains that this could undermine the United States\u2019 ability to exercise power on a global stage, since the dollar\u2019s status as the reserve currency will be in jeopardy.<\/span><\/p>\n As a possible solution, the report recommends that the U.S. government launch a digital dollar project. This way, the government can migrate the monetary dominance of the fiat dollar into the digital spectrum. <\/span>Expatiating, the analysts said, \u201cOffering a cross-border payments 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.\u201d<\/span><\/p>\n It\u2019s still unclear whether the United States government will be looking to work on such a project. Despite multiple calls, the government has dragged its heels on a possible state-backed asset.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"Reduced Dollar Influence on Global Trade<\/b><\/h2>\n
Time to Switch to a Digital Dollar<\/b><\/h2>\n