JPMorgan believes that the central bank’s digital currencies or CBDC could pose a threat to the global hegemony of the US dollar.
According to a report covered by Bloomberg, the bank’s U.S. chief economist said: “There is no country that would lose more than the United States because of the disruptive potential of the digital currency.”
“This is mainly about the hegemony of the US dollar. Spending the global reserve currency and exchange medium for international trade in products, goods and services has tremendous benefits,” the report added.
Blockchain undermines the dominance of the United States. USA on trade finance
While JPMorgan doubts that the dollar will soon be displaced as a global reserve currency. The report warns that peripheral “fragile” aspects of currency dominance could erodeincluding trade finance and the SWIFT messaging system.
In March, eight major banks, including HSBC and Citi, announced that a jointly developed blockchain for trade finance would be launched commercially in Singapore in the second half of 2020.
Blockchain-based trade finance initiatives have also been launched in China, Oman and Europe.
Digitization of the dominance of the dollar
The report advocates that EE. USA Start a digital dollar project to migrate your money domain to the fast growing digital realm.
JPMorgan warns that other countries could use digital currencies to bypass the SWIFT system and the level of economic sanctions, which undermines America’s ability to exercise power at global level through control over the global reserve currency.
“Offering a cross-border payment solution based on a digital dollar would be especially important if it were to have minimal impact on the structure of the national financial system“A very modest investment to protect an important means of projecting power into the global economy,” the report said.
For high-income countries and the USA. USA The digital currency in particular is an exercise in geopolitical risk management.
CDBDs have a “defensive stance” for stable coins
Speaking to Cointelegraph, economist John Vaz offered a critical assessment of the CBDCs, arguing that the central bank’s digital currencies include “A kind of rearguard action that central banks are struggling with because they don’t like cryptocurrencies.”
Vaz argued that cryptocurrencies deprived central banks of the ability “Pull a lever in the economy, because under things like Bitcoin you can’t make money through loans.”
“The central bank’s digital currencies are likely to have more to do with tracking money than with profits,” he added.