The steady building up of alternatives will happen until one day the reserve currency status will change hands all of a sudden.
I think the Fed could stem the whole thing by just issuing a stable coin itself pegged to the dollar and re-assert itself as the dominant currency/arbiter... but who knows. Maybe then it'd have insight into every transaction and be able to stem things with even more power than it can now.
Nobody stays king forever. Maybe it's time the US is forced to balance its books and stop riding on cheap credit. Losing the power of the reserve currency and the power that that gives to SWIFT and things will take a lot of soft power away from the US. Without allies the US couldn't stop a united China, Russia, insert-other-would-be-ally-of-theirs in a world conflict.
As another commenter said there's no leadership at teh top just chaos. People, countries, banks don't invest in chaos.
> steady building up of alternatives will happen until one day the reserve currency status will change hands all of a sudden
This is not how it has ever happened. Instead, we’ll see a gradual erosion as the world switches to multi-polarity and spheres of influence. (And, with decreasing international trade, every country’s reserve mix will vary.)
I agree that the next wave may not be dominated by a single currency. I also think that is a superior system. I think the BRICS system is based on honoring multiple currencies rather than using a single currency for settlement.
It’s more robust and less efficient. Transaction costs—and opportunities for middlemen—will increase. But the chances that your country’s economy is entirely shut down on the whim of one man in Washington is reduced.
> the BRICS system is based on honoring multiple currencies
The BRICS system is nonsense, as evidenced by basically nobody using it beyond a totem amount. Both the PBoC and RBI have superior settlement systems they could open up if they wanted to. Neither does because neither wants an unrestricted capital account.
I agree that it has been unused but disagree that it will always go unused. I think that China is using the US current global antagonism to encourage others to participate.
> disagree that it will always go unused. I think that China is using the US current global antagonism to encourage others to participate
China is in a border dispute with another founding member of the BRICS. Another is in the Western Hemisphere and will become a proxy-financial frontline.
There will be yuan, Euro and dollar payment rails. (If the EU had failed to unify, they’d be getting divided up between Washington and Moscow again.)
I think the Fed is under powered without consistent planning from our executive office. Erratic behavior does not instill confidence for people trying to rationally plan.
I also think the US used the banking system to punish enough nations that an alternative became viable.
I think the Fed could stem the whole thing by just issuing a stable coin itself pegged to the dollar and re-assert itself as the dominant currency/arbiter... but who knows. Maybe then it'd have insight into every transaction and be able to stem things with even more power than it can now.
Nobody stays king forever. Maybe it's time the US is forced to balance its books and stop riding on cheap credit. Losing the power of the reserve currency and the power that that gives to SWIFT and things will take a lot of soft power away from the US. Without allies the US couldn't stop a united China, Russia, insert-other-would-be-ally-of-theirs in a world conflict.
As another commenter said there's no leadership at teh top just chaos. People, countries, banks don't invest in chaos.