The American Fed launched their digital dollar when no one was paying attention.

[georgephillip]

So they decided on the run with simulated data then?

Even better.

Apparently, some of the elites are worried the US could lose its standing as a global reserve currency without matching China's digital token backed by its central bank?

Is the Digital Dollar Coming Soon?

"'If we don’t have a digital dollar and other central bank currencies take off—particularly if the yuan, the Chinese currency, takes off—the dollar will definitely lose its supremacy in international settlements,' says Chakravorti, who chairs the Digital Planet program at Fletcher.

"International settlements are the way that banks in different countries facilitate payments across borders."

 

[Skylar]

Apparently, some of the elites are worried the US could lose its standing as a global reserve currency without matching China's digital token backed by its central bank?

Is the Digital Dollar Coming Soon?

"'If we don’t have a digital dollar and other central bank currencies take off—particularly if the yuan, the Chinese currency, takes off—the dollar will definitely lose its supremacy in international settlements,' says Chakravorti, who chairs the Digital Planet program at Fletcher.

"International settlements are the way that banks in different countries facilitate payments across borders."

The Yuan's supremecy for international settlements would necessitate a free market valuation for the Yuan. The Chinese government carefully controls its valuation against foreign currencies.

 

[georgephillip]

The Yuan's supremecy for international settlements would necessitate a free market valuation for the Yuan. The Chinese government carefully controls its valuation against foreign currencies.

I wonder if a central bank-backed digital Yuan would function differently for international settlements?

Is the Digital Dollar Coming Soon?

"A number of other countries are wondering: Why do we rely on the dollar being the dominant international reserve currency?

"Instead, if we were to just have electronic currency backed by our respective central banks, then we can make these international transactions a lot faster, almost instantaneous.

Which other countries are moving toward digital currencies backed by their central banks?

Among the major economies,

"China is the first country out of the gate with its own digital currency.

"It’s moving to displace the dollar as the central currency being used for international transactions.

"Currently there are about 11 countries that have launched digital currencies.

"There are 15 that are piloting them.

"There are 26 countries that have them in development, 45 countries that are studying the issue.

"And 19 out of the 20 G20 countries are exploring a central bank digital currency."

 

[Skylar]

I wonder if a central bank-backed digital Yuan would function differently for international settlements?

Is the Digital Dollar Coming Soon?

"A number of other countries are wondering: Why do we rely on the dollar being the dominant international reserve currency?

"Instead, if we were to just have electronic currency backed by our respective central banks, then we can make these international transactions a lot faster, almost instantaneous.

Which other countries are moving toward digital currencies backed by their central banks?

Among the major economies,

"China is the first country out of the gate with its own digital currency.

"It’s moving to displace the dollar as the central currency being used for international transactions.

"Currently there are about 11 countries that have launched digital currencies.

"There are 15 that are piloting them.

"There are 26 countries that have them in development, 45 countries that are studying the issue.

"And 19 out of the 20 G20 countries are exploring a central bank digital currency."

The US digital currency ideation, as I understand it, is a digital token acting as a container for US Dollars. The value of the token would be determined by the value of its underlying currency.

The full faith and credit of the US has centuries of reliability. China has been an international player for about a generation. If the underlying currency in these digital containers is a determination of its value, China is going to struggle.

I appreciate your links to discussions on the topic. I find it fascinating.

 

[georgephillip]

The US digital currency ideation, as I understand it, is a digital token acting as a container for US Dollars. The value of the token would be determined by the value of its underlying currency.

The full faith and credit of the US has centuries of reliability. China has been an international player for about a generation. If the underlying currency in these digital containers is a determination of its value, China is going to struggle.

I appreciate your links to discussions on the topic. I find it fascinating.

I don't have the formal understanding of Economics to judge the efficacy of digital currencies, but I'm pretty sure we are approaching the end of dollar hegemony that began over one hundred years ago at the end of WWI and became supercharged in 1945:

Is the Digital Dollar Coming Soon?

"We are watching a phenomenon that is largely happening for defensive reasons. And to my mind, that’s always a recipe for some concern. "

"Bhaskar Chakravorti, dean of global business at The Fletcher School

"The dollar’s status as the dominant reserve currency offers many advantages to the U.S., apart from global prestige and an acknowledgment of its political and economic stability.

"It allows the U.S. to borrow money abroad at a lower cost and it gives it power to impose sanctions by cutting off the ability to transact in dollars.

"Of course, this dominance is not guaranteed to last forever. If the U.S. share of the global economy declines and other currencies rise, this dominance is vulnerable."

 

[Skylar]

I don't have the formal understanding of Economics to judge the efficacy of digital currencies, but I'm pretty sure we are approaching the end of dollar hegemony that began over one hundred years ago at the end of WWI and became supercharged in 1945:

Is the Digital Dollar Coming Soon?

"We are watching a phenomenon that is largely happening for defensive reasons. And to my mind, that’s always a recipe for some concern. "

"Bhaskar Chakravorti, dean of global business at The Fletcher School

"The dollar’s status as the dominant reserve currency offers many advantages to the U.S., apart from global prestige and an acknowledgment of its political and economic stability.

"It allows the U.S. to borrow money abroad at a lower cost and it gives it power to impose sanctions by cutting off the ability to transact in dollars.

"Of course, this dominance is not guaranteed to last forever. If the U.S. share of the global economy declines and other currencies rise, this dominance is vulnerable."

The dollars international supremacy, as I understand it, is based on 1) Its reliability 2) petrodollars.

The dollar is also subject to free market valuation (more or less), without a central government determining its value, as is the case with the Yuan.

China's ability to resist free market valuation of its currency due to the value it can provide with its manufacturing. But the total portion of the world economy China's manufacturing represents would severely limit its ability to resist free market valuation as central currency.

Especially considering the disproportion use of those manufacturing capabilities around the world.

The petrodollar, in contrast, is the media fraca of oil transactions....a commodity every country uses.

 

[georgephillip]

The petrodollar, in contrast, is the media fraca of oil transactions....a commodity every country uses.

What happen if (when?) the US loses its petrodollar advantage?

It appears the US would be stuck with lots of extra dollars that would no longer be in demand?

The Coming Breakdown of the Petrodollar System (Jerry Robinson)

 

[Skylar]

What happen if (when?) the US loses its petrodollar advantage?

It appears the US would be stuck with lots of extra dollars that would no longer be in demand?

The Coming Breakdown of the Petrodollar System (Jerry Robinson)

I would consider the loss of the petrodollar a far greater existential threat to the US than any digital currency.

 

[georgephillip]

I would consider the loss of the petrodollar a far greater existential threat to the US than any digital currency.

One account I've read recently made the claim that a trip to the grocery store that cost $100 today would cost twice as much if the US loses its petrodollar status:

The Coming Breakdown of the Petrodollar System (Jerry Robinson)

"Today America is living proof that having the world’s most important currency translates into a higher standard of living than most nations.

"At one point in our history, our nation’s largest export was a variety of consumer goods.

"Now our largest export is the U.S. dollar…a dollar that costs us practically nothing to create.

"How long will it be before the nations of the world figure out the dollar fiasco is a fraud?

"The petrodollar system has served America well.

"It has enriched our nation at the expense of other nations’ potential prosperity."

 

[Skylar]

One account I've read recently made the claim that a trip to the grocery store that cost $100 today would cost twice as much if the US loses its petrodollar status:

The Coming Breakdown of the Petrodollar System (Jerry Robinson)

"Today America is living proof that having the world’s most important currency translates into a higher standard of living than most nations.

"At one point in our history, our nation’s largest export was a variety of consumer goods.

"Now our largest export is the U.S. dollar…a dollar that costs us practically nothing to create.

"How long will it be before the nations of the world figure out the dollar fiasco is a fraud?

"The petrodollar system has served America well.

"It has enriched our nation at the expense of other nations’ potential prosperity."

In fairness, Jerry made those claims in 2007. Maybe he mean 'coming' in a more geological sense. As the dollar is still easily dominant 15 years later.

 

[georgephillip]

In fairness, Jerry made those claims in 2007. Maybe he mean 'coming' in a more geological sense. As the dollar is still easily dominant 15 years later.

What effect has the war in Ukraine had on de-dollarization?
Here's one opinion:

De-Dollarization Proceeds Apace

"Even before the beginning of the open conflict in Ukraine, there was movement away from the USD.

"Several bilateral agreements were made by various countries to enable direct commercial exchange without the need to involve US dollars.

"The rise of China as a global financial power meant that some global debt was denominated in yuan rather than dollars.

"Russia had begun a process of depending less on the US currency.

"Iran had long been subject to sanctions that prevented it from sourcing dollars for trade.

"After February 2022 the sanctions imposed on Russia by the West resulted in Russia practically being cut off from the dollar economy.

"This has led to the creation of a market that avoids the use of dollars.

"The BRICS countries have been discussing various possibilities of creating an alternative international currency.

"It remains to be seen what China is going to do.

"The PBoC has over $1 trillion in US Treasury debt, and it is unlikely that the Chinese would be willing to lose that amount of money in an effort to dethrone the USD.

"Much more likely is a gradual divestment that would not cause disruption in the markets."