The Effect of Digital currencies on Geopolitics

The first impact of the digital currencies on Geopolitics is the global efficiencies that the new system promises at much lower costs. But with the launch of new Stablecoins, backed by sovereign governments, The dependence on the Government as the sole issuers of currency comes to an end. With another option, like mentioned before global companies can take over space, globally, really quick. As the move of big tech firms to finance is still in its infancy, barring China. The real effect will be on geopolitical space rather than the commercial space and the value of the goodwill more or less remain the same.

In the Newly separated UK, the policymakers are worried that an introduction of a ‘digital yuan’ gives China the ‘ability to bypass the world’s traditional banking systems and then challenge the dollar’s pre-eminent position’ and the Governor of Bank of England governor has already raise d his concerns of ‘destabilized asymmetry’ of the international monetary system. he also indicated the ‘domineering influence’ of the dollar and was under active discussion and the heads of states are already worried about their adoption of new strategy into global politics.

Given the size of the Chinese economy, its projections, the global debt it holds and its balance of payments advantages with nearly all its trading partners, aka, every country in the world makes a digital yuan are true ‘reserve currency’ replacing Dollar. And we all know only too well, what china do with such a financial and soft power.

The consensus understanding is, the world post the digital yuan backed by the CCCP government of the size and trade like China will see an emergence of the Yuan as the reserve currency for the dollar in the medium term. This is both because of the range of financial instruments particularly in international trade and finance, and the technology infrastructure combined with huge trade surpluses and the USA treasury bonds held by the Chinese.

How is it shaping future Geopolitics?

It has been known for a while that a globally working system with interoperable cryptocurrencies would be the ideal future and that it is possible. In 2020, the leading policymakers around the world, including G7, revealed that there working on the central bank for cryptocurrencies under the auspices of the Bank for International Settlements (BIS).

But China, after the trial of a domestic digital RMB, does not seem very keen on staying on in the group. And it also gives China a chance to present the world with a geopolitical challenge from China – to cooperate.

Eventually, it will between the governments that not only set the international standards for sovereign digital currencies but also the regulations and supervisory oversight mechanism needed for a more deeply digitized global financial system. and given the democrat support in the USA for this move, the arrival of President Joe Biden is good news.

The current world of trade and finance is globally-integrated is nature, where once should expect the US to protect its interests best by cooperating with other like-minded governments to shape the overall design of digital finance together. This is the way for them to remain relevant in the new, keep the pole position as China only emerges as the new Fintech hub as offering the USA bases finance and banking businesses of the future.

With China going forward with its plans for a digital currency, given its financial system with some of the most advanced infrastructure and largest ‘fintech’ firms in the world, China is placed ideally to challenge US leadership in digital finance and the dollar’s role worldwide.

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