Currencies

Michael Pettis is a senior fellow at the Carnegie-China centreThe US dollar, analysts often propose, is the latest in a 600-year history of global reserve currencies. Each of its predecessor currencies was eventually replaced by another, and in the same way the dollar will eventually be replaced by one or more currencies.The problem with this argument, however, is that there is no such history. The role of the US dollar in the global system of trade and capital flows is unprecedented, mainly because of the unprecedented role the US economy...

Global trends such as the digitalization of economic transactions and the increasing importance of data processing manifest themselves by a decrease of cash payments and are accompanied by ideas such as the introduction of new forms of electronic money. The push for new digital currencies is driven by private companies, national governments and central banks alike. While decentralized solutions like Bitcoin, innovations in the area of decentralized finance (DEFI) and private efforts to establish asset-backed stablecoins (e.g. USD Coin or USD Tether) have already put pressure on traditional financial entities...