Coronavirus News Asia

Trump’s China nightmare may come true for dollar

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US President Donald Trump’s power struggle with China was perhaps the defining feature of his presidency, until the Covid-19 pandemic struck, writes BIlly Bambrough in Forbes.

The pandemic – and subsequent lockdowns – crashed global markets and pushed investors around the world toward the safety of the almighty dollar.

But the US dollar’s days as the world’s reserve currency could be numbered, with some of the biggest ever changes to government-backed central bank currencies looming – and China leading the field.

Casual discussions around central bank digital currencies, sometimes called CBDCs, have been going on for the last few years. 

Digital currencies would work just like regular coins and notes issued by central banks but exist entirely online. Instead of printing or minting currency, the central banks would issue digital dollars via online accounts – similar to the commercial banking apps that have exploded in popularity in recent years.

Employers could, theoretically, pay directly into these government-run accounts and both online and physical stores could accept payment from them. Foreign exchange could also be handled through them, easing the flow of international trade. 

The long-running debate among central bankers over the need for digital currencies was blown wide open last year by news of Facebook’s libra project – something that almost saw the social media giant elevate itself to (or even above) central bank status as an issuer of the first global currency. 

World leaders and regulators slapped Facebook back down. 

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