Bottom Line
- The United States remains focused on the challenge to dollar dominance from other traditional currencies but does not understand how new digital-based currencies can erode the position of the dollar.
- The United States reaps concrete benefits from having so many of the world’s economic transactions denominated in dollars, but new digital entrants offer tangible alternatives which could over time diminish demand for dollars and limit US influence.
- Rather than competing in this new arena by developing a US Central Bank Digital Currency, the United States is ceding the initiative—and control—to private firms, many of which are based outside the United States.
- The development of private “stablecoins” that have a dollar value but are not US-issued currencies gives other countries and actors the ability to pursue dollar transactions outside of US oversight and impacts the efficacy of US financial sanctions.
Authors
- Published in
- United States of America