JPMorgan: The US will be most affected by digital currency potential
No country can be more affected by the destructive potential of digital currency than the US, says Josh Younger, head of interest rate derivative strategy at JPMorgan, and economist Michael Feroli. According to them, the US risks losing its geopolitical power. This will happen if states issue individual national cryptocurrencies or a single reserve, Bloomberg reports.
“The risks relate to the hegemony of the US dollar. The issue of a global reserve currency, which will act as an exchange medium in international trade in goods and services, has enormous benefits, ”the experts explained.
They noted that this is an incentive for central banks to introduce their digital payment systems. But their appearance is unlikely to lead to a large-scale transformation of the economy and the international market, stressed JPMorgan representatives.
From their point of view, a global reserve currency will not appear in the near future. But if this happens, the dollar's influence is likely to weaken, especially in trade calculations and in the SWIFT system. If other countries can bypass SWIFT, it will be much more difficult for the United States to apply sanctions and dictate compliance with its laws. In addition, the European Union may be interested in this, analysts noted.
Yesterday, May 21, Shen Nanpeng, a member of China's People's Political Advisory Council and CEO of Sequoia Capital, invited the government to issue a stablecoin, which will be provided with a basket of four fiat currencies. These will include the Chinese yuan, the Japanese yen, the Korean won and the Hong Kong dollar, reports the local edition of Chainnews.
Shen Nanpeng explained that the issue of stablecoin will simplify and accelerate cross-border transfers in the Asian region, as well as reduce the cost of converting funds. In addition, the digital currency will be an example for other central banks and will be "the key to rebuilding the Asian economy after the coronavirus pandemic." However, the initiative from Shen does not specify whether the proposed solution will be based on blockchain.
In mid-April, a similar project was proposed by the Libra Association, which is developing the Facebook cryptocurrency. The company decided to abandon plans to create a single digital currency, instead issuing several stablins, the rate of which will be linked to different national currencies. Among them: dollars, euros, British pounds and Singapore dollars.
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