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Four years ago, a bank for international settlements (BIS) – Central Banking Bank – revealed an innovation project worn by the ugly Moniker “Mbridge”.
This aimed to create a cross -border digital currency of a central bank that connects the central bank of China, Hong Kong, Thailand, UAE and (recently) Saudi Arabia.
You might think this is secret. If so, think again: The Geeky project symbolizes a bigger battle that could be deeply important under US President Donald Trump.
More specifically, last fall, just before the United States election, bis unexpectedly drawn Mbridge, in fact it gave control of the cinema and more. BIS hard This was just because it reached the “minimal sustainable product” phase. But few believe in it. “The Americans were rolling [the BIS] Stop because it’s a threat, “one participant tells me, explaining that Washington worried that” could be used to avoid [dollar] sanctions”.
And while Agustín Carstens, Bis head, publicly denied that, guessing bubbles – not the least because Trump is undeniable on the monetary war: to the truth of Social last month He repeated threats impose “100% tariffs” countries trying to “replace the powerful American dollar” with new currency or payment systems.
So, investors should watch what’s going on next. Although Trump’s threats around trade tariffs recently captured titles, this less visible fight over money is deeply important. After all (As I mentioned before), It is precisely the global financial system based on dollars in the dollar is a true source of American hegemon power today and which Washington wants to defend.
There is no reason to worry on the Trump paper. Recent data The IMF shows that the dollar accounts for about 58 percent of the central bank reserve. This is slightly lower than at the beginning of the century, but recent diversification has generally included less currencies – not rivals like Euro or Renminbia.
More striking, quick data suggest that 49.1 percent of all payments They were in dollars last year, a 12-year maximum.
But there are three key warnings. First, central banks are gold “in the pace of eyes”, as recently noticed by the World Gold Council. This suggests the desire to protect against the dollar exposure.
Secondly, fast data can be a little wrong as the activity swells outside the western platforms. China builds its own cross -border inter -banking payment system. This is small and rudimentary, but it has 160 members, and the volume of transactions jumped 80 percent of 2022.
Third, Washington’s financial weapons appear to encourage – not stopping – the efforts of others to imagine alternatives. Hence Mbridge is important: if these digital pipes ever work at speed and extent (large “if”), this would cause the HUB system and say “focused on US federal reserves.
So how will Washington answer? Chris Giancarlo, Head of Commission for Trafficking in Commercial Future during the first Trump administration, hopes to use carrots-TJ. Policies that make the dollar extremely convincing to the non-American. This means that he is advocating for good economic “values,” he tells me and accepts more cyber innovation. “Digital Dollar Project” that will participate in how to do it next week.
This is extremely reasonable. But Trump seems to be careful to use sticks. Last month, he issued an executive order that banned any use of a digital Central Bank digital currency in America, as “threatening the stability of the financial system, individual privacy and sovereignty of the United States.”
Instead, he advocated Bitcoin (it doesn’t matter what is viewed as Fiat Dollar Hedge). More importantly, he also supported “the growth of legal and legitimate stable stable trees that support the dollar.”
This may seem unusual, not at least because it is diametrically opposed to the European Central Bank. Some cynics will undoubtedly attribute him to the fact that Howard Lutnick, a trade secretary, is helped construction Tether, the largest existing coin.
But there is another factor: Trump’s team thinks Stablecoins could be a secret weapon to promote more – no less – dollars. “That’s very good for us,” one tells me. This is because the Stablecoini 21st Century-After the 20th Century Eurodollara market, is impossible to transactions in offshore dollars that are without heavy regulations on the coast. This complains to many financiers who face geopolitical risk (even if the stables, unlike Eurodollara, do not pay a refund).
In practice, the current market cap of Stablecoin-OKO 220 billion dollars is always breaking over with Eurodollars, let alone on the US capital market from $ 6 to $ 6.
But the key thing is as follows: while Trump is constantly trying to process – or break – post -war geopolitical order, not only tariffs and tanks are important; The financial water supply also works. These initial battles around the CBDC Stablecoins could “take well for the central stage”, as the Atlantic Council notes. Everyone knows how to analyze Mbridge in Chinese?
