A cold war is brewing in the financial world. America is losing its dominant position to countries exploring alternative currencies. Both CBDCs and the Euro are poised to make their mark on the industry.
From Innocent Beginnings…
Everyone looks at the world’s leading economy for guidance, yet the United States may lose that situation in the near future.
Several cracks have appeared in this facade. The first major “blow” was dealt when CIPS was introduced. CIPS, or Cross-Border Inter-Bank payments System, is a rival to Swift, commonly used in the Western world. The CIPS initiative is intended for clearing and settlement in cross-border RMB payments. China considers this to be a major tool for revolutionizing finance.
What most people don’t realize, is the impact CIPS can make. It encompasses participants in 6 continents, including the likes of Russia. Although it doesn’t facilitate the transfer of use, it is a key payment rail to increase global adoption of the yuan. Back in 2019, the network processed nearly $20 billion per day, which is roughly three times the volume of SWIFT.
To a Currency Cold War
Although the CIPS concept may not seem like an immediate “threat” to the US Dollar, the reality may be very different. Russia and China are looking to take their existing financial working relation to the next level. A financial alliance -of sorts- is being built, as both countries want to erode their reliance on the US Dollar.
Instead, both countries seek out the most unlikely ally of them all. The Euro is now a prominent currency for trading dealings between these two countries. An effort to ditch the greenback was expected, thanks to a long-standing partnership. After all, CIPS was only the first brick in the foundation. Russia and China also have a currency swap deal, allowing them to sell currencies to one another outside of the global market system.
Slowly but surely, we have witnessed the development of a “front” against the US Dollar. If the Eastern world reduces its reliance on the greenback, there is no telling what will happen exactly. Thanks to the introduction of CBDCs, shifting away from the Dollar may become even easier.
Read more: https://cryptoslate.com/china-is-in-pole-position-to-dethrone-the-us-as-the-leading-financial-power/
