Sunday , September 19 2021
Home / Project Syndicate / Will Central Bank Digital Currencies Doom Dollar Dominance?

Will Central Bank Digital Currencies Doom Dollar Dominance?

Summary:
Some say that issuance of central bank digital currencies will transform the international monetary status quo by eroding the US dollar’s dominance of cross-border payments and greatly reducing transaction costs. But this is not going to happen. BERKELEY – August 13-15 marks the 50th anniversary of “the weekend that changed the world,” when US President Richard Nixon suspended the dollar’s convertibility into gold at a fixed price and rung down the curtain on the Bretton Woods international monetary system. The subsequent half-century brought many surprises. From a monetary standpoint, one of the greatest was the dollar’s continued dominance as a vehicle for cross-border transactions. Are

Topics:
Barry Eichengreen considers the following as important:

This could be interesting, too:

Tamara White writes Africa in the news: Vaccine, energy, and climate change updates

Robert E. Litan writes Manchin and the Democrats’ last chance

conversableeconomist writes Mulling Pandemic Advice from September 2019

Emilie Openchowski writes Weekend reading: Bolstering U.S. social infrastructure and the care economy through public investments edition

Some say that issuance of central bank digital currencies will transform the international monetary status quo by eroding the US dollar’s dominance of cross-border payments and greatly reducing transaction costs. But this is not going to happen.

BERKELEY – August 13-15 marks the 50th anniversary of “the weekend that changed the world,” when US President Richard Nixon suspended the dollar’s convertibility into gold at a fixed price and rung down the curtain on the Bretton Woods international monetary system. The subsequent half-century brought many surprises. From a monetary standpoint, one of the greatest was the dollar’s continued dominance as a vehicle for cross-border transactions.

Under Bretton Woods, the dollar’s supremacy was readily explicable. America’s financial position coming out of World War II was impregnable. Changes in the price at which dollars could be converted into gold were unthinkable, first because of that financial strength and then, as the country’s monetary position weakened, because of the possibility that one devaluation would create expectations of another.

...

Barry Eichengreen
Barry Eichengreen is Professor of Economics at the University of California, Berkeley; Pitt Professor of American History and Institutions at the University of Cambridge; and a former senior policy adviser at the International Monetary Fund.

Leave a Reply

Your email address will not be published. Required fields are marked *