No. This is not the way reserve currencies work.
Currencies do not become reserve currencies because they are easy to trade and ownership can be on the blockchain. They are reserve currencies because the owner can sleep at night with $100bn in one place in one asset.
Currencies do not become reserve currencies because they are easy to trade and ownership can be on the blockchain. They are reserve currencies because the owner can sleep at night with $100bn in one place in one asset.
https://twitter.com/novogratz/status/1335711950043537412
In the end it is about trust. And reserve currency status is about a multitude of sovereigns trusting one other with the value of their accumulated ‘net retained export earnings’ - and the key is that the others with who’ll they deal have to respect that choice of collateral.
Afghanistan, the DRC, and Russia all have very low debt to GDP. But if some country held only treasury bills of those three countries’ currencies, one would not regard that as a wise choice of assets which would be deemed acceptable collateral to a vast array of other sovereigns.
Digital RMB (DC/EP) is just cash RMB in digital form. Any ‘reserve’ holder will hold not pure non-interest-earning cash but instead will hold a term asset. So digital exchange doesn’t matter. It is the asset held in an account which matters.
Countries will not keep their reserves in a digital app on someone’s phone, PC, or cold wallet on a USB stick. The only assets worthwhile as sovereign reserves are those which the institution of a country recognises as assets owned by the institution of another country.
Denomination of crude trade? petroyuan-gold futures? It doesn’t matter.
What matters is how a country saves in a bilateral relationship with another. Digital currency is meaningless in that regard.
What matters is how a country saves in a bilateral relationship with another. Digital currency is meaningless in that regard.
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