Will the dollar lose its status as the global reserve currency? Arthur Hayes, co-founder of BitMEX, does not rule out this possibility and believes that it is a question worth considering for those who want to preserve their wealth.
Arthur Hayes – Co-founder of BitMEX
The former CEO of the exchange published an article on Thursday exploring the economy and role of the U.S. dollar around the world, and how a declining greenback could affect cryptocurrency adoption. How global.
Dollar Dominance and Fall
in the article title “For liquidity,” Hayes explained, the dollar’s global dominance is backed by an open U.S. capital account and support for free trade. Each creates additional demand for dollars, since the former allows Asian countries to buy U.S. assets in dollars, while the latter allows indigenous peoples to buy cheap Asian products. Asia.
However, being the issuer of the global reserve currency also means that the US Federal Reserve (Fed) and the US Treasury have a responsibility to preserve the integrity of the global economy. In other words, when the global economy needs more dollars, the US must provide them, even if it creates inflationary pressures on the domestic economy.
“Trillions of dollars of Asian wealth also depend on the good attitude of American politicians. As Russia has recently discovered, the rule of law and property rights are not static.”
Over the past few months, several global trade corridors have expressed interest in moving away from U.S. dollars for commercial payments. For example, energy companies in China and France agreed last month to trade liquefied natural gas in yuan rather than dollars. Brazil and China also have an agreement to conduct trade in their own currencies rather than dollars.
As Hayes explains, an overreliance on the dollar means countries like China must import US monetary policy and take political risk.
While the US has long been viewed as a reliable and politically stable country, the co-founders claim that has changed following the arrest of former President Donald Trump earlier this month. At the time, Trump predicted that the dollar would lose its global dominance once he was released on bail.
The Future of Global Currency
Hayes predicts a future of many currencies, but none as “hegemonic” as the dollar is today. Imbalances between blocks will be resolved with “neutral reserve currencies” such as gold and cryptocurrencies, “not pegged to any particular country.”
“As Bitcoin continues to prove to be the currency with the most limited supply, I expect more and more countries will at least start to consider whether it is a suitable means of savings other than gold.”
Hayes also linked the threat of a weakening of the dollar’s role globally to the Biden administration’s crackdown on crypto firms.
“The West is making it harder to buy cryptocurrencies and store them in private wallets.”
Since the fall of FTX, many politicians on the American political left have been skeptical of cryptocurrencies, with some questioning whether the property belongs to the state.
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