1/12
Very good, sober @noahpinion piece on digital RMB (it seems hard for most to write soberly about digital currencies). He makes at least four important points:
First, given how advanced China's payments system already is, the main difference...
bloomberg.com/opinion/articl…
Very good, sober @noahpinion piece on digital RMB (it seems hard for most to write soberly about digital currencies). He makes at least four important points:
First, given how advanced China's payments system already is, the main difference...
bloomberg.com/opinion/articl…
2/12
a digital PBoC wallet creates is that it gives the regulators more control over and information about household and business transactions and savings. Although he doesn't mention this, it may also transform the liability structure of the commercial banks.
a digital PBoC wallet creates is that it gives the regulators more control over and information about household and business transactions and savings. Although he doesn't mention this, it may also transform the liability structure of the commercial banks.
3/12
Second, a digital RMB is unlikely to increase the international prominence of the RMB, let alone at the expense of the US dollar. In fact the RMB is only remarkable internationally for how little it is used relative to China's size, and especially its size as a trading...
Second, a digital RMB is unlikely to increase the international prominence of the RMB, let alone at the expense of the US dollar. In fact the RMB is only remarkable internationally for how little it is used relative to China's size, and especially its size as a trading...
4/12
nation. There are some obvious and less obvious reasons for this, almost none of which are addressed by the creation of a digital currency.
nation. There are some obvious and less obvious reasons for this, almost none of which are addressed by the creation of a digital currency.
5/12
Third, if its very low transaction costs and a greater willingness by Beijing to give up control of the digital currency actually do result in more widespread use of the RMB internationally, this cannot but come at the expense of Beijing's ability to control its...
Third, if its very low transaction costs and a greater willingness by Beijing to give up control of the digital currency actually do result in more widespread use of the RMB internationally, this cannot but come at the expense of Beijing's ability to control its...
6/12
financial and monetary system. This is true almost by definition. But given growing problems in the banking system, Beijing is more likely to want more control rather than less. The recent peek-a-boo over a possible...
financial and monetary system. This is true almost by definition. But given growing problems in the banking system, Beijing is more likely to want more control rather than less. The recent peek-a-boo over a possible...
7/12
Huarong default (just the latest in a long line) should remind us how very unstable the financial sector can be and how nervous Beijing is about the potentially destabilizing effects of fixing the underlying problems.
Huarong default (just the latest in a long line) should remind us how very unstable the financial sector can be and how nervous Beijing is about the potentially destabilizing effects of fixing the underlying problems.
8/12
Fourth, and perhaps most important, the global dominance of the US dollar may benefit Wall Street enormously and buttress American geopolitical power, but it comes at a high cost to American workers, farmers, producers and the middle class. If the digital RMB or some...
Fourth, and perhaps most important, the global dominance of the US dollar may benefit Wall Street enormously and buttress American geopolitical power, but it comes at a high cost to American workers, farmers, producers and the middle class. If the digital RMB or some...
9/12
other currency did partially replace the US dollar, this would in fact benefit the US economy, not undermine it (although expect Wall Street and foreign affairs and defense officials to worry).
In my opinion the US should be eager to share its exorbitant burden with...
other currency did partially replace the US dollar, this would in fact benefit the US economy, not undermine it (although expect Wall Street and foreign affairs and defense officials to worry).
In my opinion the US should be eager to share its exorbitant burden with...
10/12
other major economies, but in spite of all their concerns about the "exorbitant privilege", no one wants the burden — least of all countries like China, Japan, Germany, or others that depend heavily on the US to resolve their structural demand deficiencies.
other major economies, but in spite of all their concerns about the "exorbitant privilege", no one wants the burden — least of all countries like China, Japan, Germany, or others that depend heavily on the US to resolve their structural demand deficiencies.
11/12
That is why a permanent diminution of the role of the US dollar is unlikely to happen either until the US economy is no longer able to bear the burden, and the system breaks down chaotically (the story of sterling in the 1920s and 1930s perhaps gives a preview), or until...
That is why a permanent diminution of the role of the US dollar is unlikely to happen either until the US economy is no longer able to bear the burden, and the system breaks down chaotically (the story of sterling in the 1920s and 1930s perhaps gives a preview), or until...
12/12
Washington finally takes steps to rebalance trade and reduce dollar dominance, either in favor of another currency (unlikely) or in favor of a synthetic currency like bancor or the SDR.
Washington finally takes steps to rebalance trade and reduce dollar dominance, either in favor of another currency (unlikely) or in favor of a synthetic currency like bancor or the SDR.
For those interested, a quick reminder that @izakaminska’s article on the same topic was also very useful.
ft.com/content/76e450…
ft.com/content/76e450…
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