Cointime

Download App
iOS & Android

With the CBDCs, a New World Monetary Order Could Emerge, Which Will Not Please America

George Soros, do you know him?

I guess I do. Everyone remembers that episode in the early 90’s when George Soros attacked the Bank of England to earn 1.1 billion dollars when the Bank of England was almost ruined.

Well, on the evening of the 2008 financial crisis, George Soros declared that this crisis marked “the end of an era of credit expansion based on the dollar as the international reserve currency” in his book “The Crash of 2008 and What it Means: The New Paradigm for Financial Markets.

The facts have proven him wrong so far…

Even today, the appetite to hold US dollars is growing in the face of the energy shock and hyperinflation. The sanctions against Russia in retaliation for the invasion of Ukraine, and in particular the expulsion of Russian banks from the SWIFT payment network, underline once again that in the event of a major disagreement, the whole world aligns itself, willingly or not, with American interests.

A relative but real powerlessness

Accustomed to its pariah status, Moscow has decided to invoice its energy exports in rubles to support its currency. But this solution is not permanent, given the refusal of several countries, particularly in Europe, to make such a compromise. Similarly, the project to bring together MIR and UnionPay, the Russian and Chinese payment systems, is, by definition, limited in its applicability.

Beijing is also familiar with the retaliatory practices that the West sometimes uses. In 1989, following the Tiananmen Square incidents, China was excluded from the credit markets. The country was unable to counteract the ostracism that lasted for several years.

Today, as a result of its growing role in international trade, China is increasingly positioning itself as the champion of emerging countries, forming a non-aligned bloc around a sprawling infrastructure as part of the Belt and Road Initiative (BRI). Such a project, however, requires access to a reliable and unconditional method of payment.

Since the U.S. dollar’s convertibility to gold was abandoned in 1971, the greenback has been the cornerstone of the international monetary system — three-quarters of China’s trade is invoiced in this currency and therefore dependent on the SWIFT network. This American supremacy subordinates other countries to Washington’s whims and mood swings.

But remedial tools may soon emerge. The technological advances of the last few years should allow the implementation of autonomous payment mechanisms.

A digital solution

The People’s Bank of China wants to introduce its digital currency. The initiative is not unique: many countries are preparing to launch a digital currency in the next decade.

This would not address the risk of unilateral sanctions. Indeed, these projects would take the form of central bank digital currencies (CBDCs), disintermediating depository banks and giving central banks — that is, in most countries, the state — full powers. Any counterparty wishing to deal with China, for example, would be dependent on Beijing’s wishes, which would effectively control the settlement of digital renminbi transactions.

But such a structure would neutralize any economic reprisals from a third country by allowing, among other things, to bypass SWIFT. It would therefore be dissociated from the geopolitical context.

Until now, the control of the reserve currency placed the United States at the center of the world financial scene. CBDCs would guarantee permanent and uninterrupted access to a payment system independent of SWIFT.

In 1989, faced with international sanctions, Deng Xiaoping expressed his helplessness by quoting a Chinese proverb: “It is up to the person who tied the knot to untie it.”

China, Russia, and their partners should soon be able to untie the knot themselves, establishing a multilateral monetary order around digital currencies. Perhaps Soros was prescient. If not an end to the credit expansion our economies cannot live without, the current crisis is likely to be the death knell for the dollar standard.

Comments

All Comments

Recommended for you

  • Bitcoin Layer 2 Project Bitlayer Launches $50 Million Ecosystem Incentive Program

    Bitlayer, a Bitcoin Layer2 infrastructure project based on the BitVM paradigm, announced the launch of a $50 million ecological incentive plan to promote the development of its mainnet ecosystem. The first phase of the incentive program, named "Ready Player One," will begin registration at 09:00 UTC on March 29th, 2024 and end at 09:00 UTC on April 29th, 2024, and will officially start after the Bitlayer mainnet is launched. Specific rules and reward allocation guidelines for the event will be disclosed in subsequent announcements. Through the "Ready Player One" and other ecological incentive plans, Bitlayer aims to accelerate ecosystem development and incentivize projects to deploy on the Bitlayer mainnet. In addition, Bitlayer promises comprehensive ecosystem support for all projects, including potential foundation and institutional investment, initial liquidity support, comprehensive product development resources, guidance and investment opportunities from top incubators, support from the Bitcoin community and OGs, ecosystem cooperation, and co-creation.

  • Stablecoin protocol Ethena on BNBChain has been hacked

    The stablecoin protocol Ethena on BNBChain has been hacked, causing a loss of 480 BNB, worth about $290,000, as monitored by PeckShieldAlert.

  • Singapore-based Bitcoin Layer2 Project BEVM Raises Tens of Millions in Seed and Series A Funding

    Singapore-based Bitcoin Layer2 project, BEVM, has completed its seed round and part of its Series A round, raising tens of millions of USD from over 20 investors including RockTree Capital, Waterdrip Capital, and ViaBTC Capital. The project's Series A valuation has reached $200m and aims to accelerate its international development and roll-out. BEVM is an EVM-compatible Bitcoin Layer2 network built on Taproot Consensus, which uses $BTC as gas and aims to bring 10% of $BTC into its Layer2 network environment. The project's mainnet is scheduled to launch on March 28th and has already implemented decentralized Bitcoin cross-chain custody services through Schnorr Signature, MAST, and Bitcoin SPVs.

  • Ethereum on-chain DEX transaction volume exceeded $2.1 billion yesterday

    According to DeFiLlama data, the trading volume of DEX on the Ethereum blockchain on March 28th was 2.111 billion US dollars, ranking first. The daily trading volume of DEX on the BSC chain was 1.398 billion US dollars, ranking second; the daily trading volume of DEX on the Solana chain was 1.097 billion US dollars, ranking third.

  • Taiwan’s Ministry of Interior has approved the establishment of a cryptocurrency industry association

    Taiwan's Ministry of the Interior has approved the application of the local cryptocurrency industry to establish an industry association. The local cryptocurrency industry working group, which was established last year to prepare for the establishment of the industry association, said that the working group now needs to complete all preparations and officially establish the cryptocurrency industry association by the end of June as required by the government. The working group is currently composed of 22 cryptocurrency companies, including Taiwan's major exchanges such as MaiCoin and BitoPro. The working group pointed out that ACE Exchange has been expelled from the group because the troubled exchange is under investigation by prosecutors for improper behavior by its former executives.

  • Grayscale ETH Trust negative premium rate is 22.77%

    According to ChainCatcher news and Coinglass data, the Grayscale Bitcoin Trust Fund (GBTC) has a premium rate of 0.02%. The Grayscale ETH Trust has a negative premium rate of 22.77%, and the ETC Trust has a negative premium rate of 36.58%.In addition, the Grayscale BCH Trust has a premium rate of 238.13%, the LTC Trust has a premium rate of 380.60%, the SOL Trust has a premium rate of 515.93%, the MANA Trust has a premium rate of 726.65%, the LINK Trust has a premium rate of 713.66%, and the FIL Trust has a premium rate of 3057.89%.

  • Net inflows into spot Bitcoin ETFs reached $179 million on March 28

    Spot on Chain, a blockchain data monitoring platform, posted on social media that the net inflow of spot bitcoin ETF on March 28th reached 179 million US dollars, a decrease of 26.9% compared to the previous trading day. After 54 trading days, the total net inflow accumulated to 12.13 billion US dollars, which is the level before the last fully negative trading week. BlackRock's iShares Bitcoin ETF (IBIT) and Grayscale's GBTC both saw a significant slowdown in daily inflows and outflows on March 28th.

  • Bitcoin spot ETF had a total net inflow of US$179 million yesterday, and the ETF net asset ratio reached 4.25%

    According to SoSoValue data, the Bitcoin spot ETF had a total net inflow of $179 million yesterday (March 28th, US Eastern Time).Yesterday, Grayscale's ETF GBTC had a net outflow of $104 million, and its historical net outflow is $14.77 billion. The Bitcoin spot ETF with the highest net inflow yesterday was BlackRock's ETF IBIT, with a net inflow of approximately $95.12 million, and its historical total net inflow has reached $13.96 billion. The second is Fidelity's ETF FBTC, with a net inflow of approximately $68.09 million yesterday, and its historical total net inflow has reached $7.56 billion.As of now, the total net asset value of Bitcoin spot ETF is $59.1 billion, and the ETF net asset ratio (market value compared to the total market value of Bitcoin) is 4.25%, with a historical total net inflow of $12.12 billion.

  • Ethereum Inscription ETHS rose over 95% in 24H

    CoinGecko data shows that Ethereum Inscription ETHS has risen by 95.9% in the last 24 hours, now reporting at 7.51 USDT. Earlier, Ethereum founder Vitalik released the latest long article "Ethereum has blobs. Where do we go from here?". As a result of this news, the price of Ethereum Inscription ETHS soared.

  • Binance exec sues Nigeria’s National Security Agency over detention

    According to CoinGape, Tigran Gambaryan, a detained executive of Binance, has filed a lawsuit against the National Security Adviser (NSA) and the Economic and Financial Crimes Commission (EFCC) in Nigeria. Local media reported that on March 28th, Tigran Gambaryan sued the National Security Agency, accusing it of violating his basic human rights and seeking five major remedies from the court.He urged the court to approve the return of his passport and to release him immediately after more than three weeks of detention. He also requested a ban on future detention in similar investigations and demanded public apologies from the National Security Agency and the EFCC.In addition, he requested that the court pay the full amount of compensation for the lawsuit.