- Various federal agencies in the United States, as well as Congress legislators, have been examining how a CBDC project might influence the country’s economy and status as an international reserve currency, according to publicly available information.
- After seeing how western countries have weaponized the US dollar in recent years, more powerful countries may now regard the CBDC as an important aspect of their financial independence from the west.
- Since Russia’s special military operation in Ukraine, foreign countries led by the United States have imposed harsh sanctions. The majority of these sanctions have limited the country’s access to foreign cash, making settlements in US dollars unfeasible.
Hiromi Yamaoka, a banking executive, feels that the situation in Ukraine will have an impact on central bank digital currency (CBDC) policy around the world. Countries such as China are considering CBDCs to fight the dominance of the US dollar, according to a former head of the Bank of Japan’s payments and settlements department.
China And Everyone Else May Look Towards CBDC As Either A Way To Offset The US Dollar’s Supremacy
Since Russia’s special military operation in Ukraine, foreign countries led by the United States have imposed harsh sanctions. The majority of these sanctions have limited the country’s access to foreign cash, making settlements in US dollars unfeasible.
To retain efficacy, Yamaoka believes that sanctions involving financial infrastructure should not be overdone. He went on to say
The freeze of Russia’s foreign funds was the most effective and powerful weapon.
These sanctions, Yamaoka continued, have demonstrated the impact of politics and national security on global financial infrastructure. China may promote the digital yuan as an alternative currency for cross-border settlements after seeing how much influence western countries wield with this sanction.
Defense and national security will undoubtedly become significant themes when debating CBDC, Yamaoka said, adding that China could establish a currency bloc.
His statement echoes China’s objective when the digital yuan was launched. One of the main objectives of the digital currency was to assist the Asian country in increasing transactions in yuan rather than dollars.
It was first shown to a global audience at the Winter Olympics and is now utilized by over 260 million people in the country.
Other countries, such as Russia, have engaged in national digital projects as well.
And, after seeing how western countries have weaponized the US dollar in recent years, more powerful countries may now regard the CBDC as an important aspect of their financial independence from the west.
The US Administration Are Likewise Looking Into Creating Virtual Currency
In a recent report, the International Monetary Fund (IMF) claimed that the Chinese Yuan had the potential to ease cross-border payments, particularly if the government can develop an understanding of foreign jurisdictions. Seeing China’s success with its CBDC initiative, the US government has expressed a willingness to cooperate on a digital counterpart to protect the US dollar’s supremacy in international transactions through a recently signed executive order.
Various federal agencies in the United States, as well as Congress legislators, have been examining how a CBDC project might influence the country’s economy and status as an international reserve currency, according to the publicly available information.
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Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/03/21/penalties-against-russia-may-encourage-additional-nations-to-improve-cbdcs/