Don961: The digital dollar… American insistence on leading the global monetary system
Issuing the digital dollar will be a confirmation of the continued supremacy of American financial and economic globalization,
Abdul Hafez Al-Sawy 20/7/2021
The virtual currencies “Bitcoin and its sisters” represented a historical moment in the global economic performance, despite the limited transactions, and limiting those transactions to what we can call the economic elite, with great solvency.
The historicity of the moment comes in the fact that it took the process of issuing money out of state functions, and stripped it of its most important functions and sovereign features, which is the issuance of money, so that virtual currencies made the issuance process in the hands of miners, who are individuals with high technology skills.
The other thing, which is related to the historicity of the moment of issuing virtual currencies, is that hopes for removing the dollar from the throne of leadership of the global monetary system rose dramatically, since 1948 the dollar became the first currency globally in settling financial and commercial transactions worldwide, and foreign exchange reserves depended on it in all Central banks.
As much as virtual currencies represented a threat to countries in general, and to America in particular, as much as they were surrounded by risks to the global economy, represented in the great ease of laundering dirty money, and the other thing is the increase in their energy consumption in mining operations, which is still within a limited framework of its size, so what about If it became used in daily dealings all over the world?
Hence, many countries are trying to control the phenomenon of virtual currencies, and even prevent, or criminalize dealing with them, and seek to confront virtual currencies, quickly issuing their own digital currencies, representing their local currency, to emphasize their sovereignty in an important matter, which is the issuance of money, and the second thing is to confront Fraud and dirty money laundering, and according to the latest published figures, about 60 countries have decided to issue their own digital currencies.
The database of the World Bank, in 2020, shows that the dollar still ranks first in the formation of countries’ foreign exchange reserves, despite the state of conflict between America and many countries with the largest balance of reserves.
At the top of these countries is China, which has the largest stock of foreign exchange reserves at about 3.35 trillion dollars, Japan 1.39 trillion, Switzerland 1.08 trillion, the eurozone 1.07 trillion, Russia 596 billion, and India 590 billion.
As for the report of the International Monetary Fund issued in July 2020, it confirms that the total international reserves amounted to 11.73 trillion dollars in the first quarter of 2020, and that the dollar’s share of these reserves was about 61.9%, while the Japanese yen’s share was about 5.6%, and the Chinese yuan It was the holder of the lowest share with 1.9% of the total global reserves of countries.
These data reflect the extent of confidence that the dollar enjoys with global central banks, as well as its role in the global economy, despite the decline it suffered during the era of former US President Donald Trump.
There are about 60 countries that have decided to issue their own cryptocurrency (Shutterstock)
Although virtual currencies began as a technology and practice outside the United States, they gained great momentum thanks to American companies, individuals and institutions, and we found major American companies accepting these currencies in selling their products, such as Tesla, Intel, Microsoft (Microsoft), and others. Some individuals also had a major role in promoting virtual currencies, such as Elon Musk, and major universities have announced the monitoring of investments in these currencies, including Harvard and Michigan.
Which means that the largest role in this market is in the hands of America, and that the issuance of a law or decision on these currencies would raise dealings with them, increase their value, and grant them acceptance. And vice versa, the issuance of a decision banning its work, or restricting its acceptance, would reduce its value, and lose a lot of investments.
The future of the digital dollar
With the recovery of virtual currencies under American auspices, the administration of President Joe Biden, which is restoring the concept of “a strong America”, will continue this competitive advantage that allows it to lead the global monetary system.
Therefore, we found Jerome Powell, President of the US Federal Reserve, recently revealing the issuance of a sovereign digital currency, and he says that the matter has been under study for months with a group of American universities and research centers.
We think that the studies that are conducted on the issue of digital dollar issuance do not concern the economic dimensions, because America believes that the step proves its position in controlling the monetary system in the world, but perhaps these studies are based on the tightness of the electronic system, and the avoidance of technological gaps in virtual currencies. , and to ensure the ability of the Federal Reserve to manage the new system.
Undoubtedly, in the case of issuing the digital dollar, this will have a bad impact on virtual currencies, which suffer from a decline in their value during the last period, due to the announcement of a good number of countries issuing digital currencies, and on top of these countries are America and China, the most famous virtual currencies. Bitcoin” had reached about $60,000 per unit, but its value has now fallen by nearly 50%, and has fallen under the $30,000 ceiling.
The digital dollar will ensure a better legal situation in the existing transactions market, and will pull the rug with large areas of virtual currencies, because it depends on a legal reference, and a large percentage of transactions based on it are swindling, fraud and illegal acquisitions, which may be provided by technology capabilities in the case of virtual currencies. .
The issuance of the digital dollar will lead to complete control over financial transactions and commercial settlements through it, because its database is under the supervision of the Federal Reserve, and there will be monitoring of transactions aimed at money laundering, and determining the paths and directions of all financial transactions that take place through the digital dollar, unlike Virtual currencies that are only available to some technicians involved in dealing with those currencies.
In the case of issuing a digital dollar, this will have a negative impact on virtual currencies (Getty Images)
Many countries will welcome the issuance of the digital dollar, as it is issued by a known entity, and from a country that still represents the largest economy in the world. The digital dollar will also restore things to normal in the issue of linking the issuance of money to the sovereignty of the state.
The competition between the expected digital dollar, with the rest of the digital currencies, remains within the framework of the traditional competition between America and other countries such as China and Japan, although the competition will continue to be governed by the fact that America is the largest producer of technology, and has a large percentage of global economic capabilities.
There is an important matter regarding the future of the paper dollar. It is difficult in the short and medium term for the existence of the paper dollar to disappear, due to the weak technological infrastructure of many countries, and even individuals. As in the case of virtual currencies, as they belong to a very limited number of dealers in the global market, the digital dollar will also be in its infancy, and for a period of time not short, for the reasons we mentioned.
In conclusion, the issuance of the digital dollar will be a confirmation of the continued supremacy of financial and economic globalization, under the auspices of America. Talking about a new global monetary system will remain just hopes far from reality, due to the American control, which will exercise its continuous role for more than 7 decades of controlling monetary and financial policies worldwide. LINK