CBDCs set to disrupt dollar dominance

For almost 80 years, the US dollar has dominated the global financial system. Its pre-eminence survived the collapse of the Bretton Woods system in the early 1970s and has even risen since the Covid-19 pandemic.

The United States has long enjoyed the many benefits that flow from this privileged position — continuous capital inflows, lower foreign borrowing costs and the power to sanction other nations. But with the development of new monetary technologies and the sanctions imposed on Russia’s central bank in 2022, this could be set to change.

Central Bank Digital Currencies (CBDCs) have the potential to disrupt dollar dominance and transform the mechanics of the global financial system by providing faster and cheaper ways to settle international trade and financial transactions. CBDCs are a form of digital currency issued by the central bank, either for use by the general public (retail) or by businesses (wholesale).


Business Asia
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