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Blockchain Could Temper Risk of Holding US$ ~ WEF … (Death of the Dollar–2)

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Avatar for MaJes.tytyty
Written by   5
3 months ago

US dollar hegemony has resulted in an over-reliance on the US dollar.

World Economic Forum


"Digital currency could build more sustainable global economy"

– Flash Points –

1 – Reliance on the US$ entails various risks.
2 – That over-reliance could be alleviated by a diversified digital currency.
3 – Interoperability between fiat and digital currencies will be essential. 

– Synopsis –

US dollar hegemony has resulted in an over-reliance on the US dollar. As of 1Q 2019, the IMF estimated that the dollar comprised 62% of the total foreign reserves held by central banks.

Many of those dollars are held in the form of bonds, and are therefore not in circulation.

That can be problematic, and any crisis resulting in a flight to the US dollar would have numerous ramifications.

Somewhat Stable and Sustainable 

The over-reliance on the dollar, as well as the resulting imbalance in terms of trade flow, could be alleviated by a diversified stablecoin. 

Stablecoins and blockchain technology could be used to establish “a more sustainable, inclusive, and resilient global financial system.”  As well as interoperability between digital and fiat currencies, such a system would also require interoperability between blockchains. 

– Insight from Outside –

Most observers can realize that there is an “over-reliance”  on the US dollar. Far fewer people can see the “danger”  in holding it.  

Nothing, and Next to Nothing 

The US dollar is backed by … nothing. Under the post-war Bretton Woods system, the dollar was backed by gold and functioned as the world’s reserve currency. 

However, since President Nixon abandoned the Bretton Woods system in 1971 by stopping the dollar’s convertibility to gold, the dollar has become massively inflated and its value has dropped to … next to nothing.   

A centralized digital currency, even if it is a stablecoin, is not the only solution, and not the best solution. At the same time, if it lessens the danger of holding a fragile US dollar that is backed by nothing, then it might be worth implementing. 

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Avatar for MaJes.tytyty
Written by   5
3 months ago
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