JPMorgan believes that CBDCs, i.e. the digital currencies distributed by central banks, pose a threat to the global hegemony of the US dollar.
In particular, Josh Younger, Head of the U.S. Interest-rate Derivatives Strategy, and Michael Feroli, Chief U.S. Economist, wrote in a recent report:
„The United States is the nation that could be most harmed by the disruptive potential of digital currency. […]
This revolves primarily around the hegemony of the U.S. dollar. The issuance of a global reserve currency and a trading instrument for international trade in raw materials, goods and services offers enormous advantages.
The blockchain is a threat to the dollar.
Although JPMorgan doubts that the dollar could lose its role as a global reserve currency overnight, the company warns that currency dominance is threatened in some peripheral and „fragile“ aspects, such as trade finance and SWIFT messaging systems.
In March, eight major banks, including HSBC and what is The News Spy all about / how to buy ripple uk Bitcoin Revolution / what is tp Immediate Edge / can i trade litecoin for bitcoin on Bitcoin Evolution / cryptocurrency traded on Bitcoin Era / withdraw eth from Bitcoin Circuit / Bitcoin Profit x limited / what is Bitcoin Trader wikipedia / Bitcoin Billionaire practice mode / Bitcoin Code phone number change, announced the launch of blockchain-based trade finance systems in Singapore by the second half of 2020. Blockchain-based trade finance initiatives were also introduced in Europe, China and the Sultanate of Oman.
Digitizing the dollar to maintain US dominance
The report argues that the United States should launch a dollar in a digital version, so as to keep its monetary domain intact.
JPMorgan also warns that some nations could use digital currencies to circumvent the SWIFT system and possible economic sanctions, compromising the United States‘ ability to exercise its power on the global stage:
„Offering a solution for cross-border payments built on the basis of the digital dollar, particularly if designed to be unobtrusive to the structure of the local financial system, would be a very modest investment to protect a key tool to project U.S. power into the global economy.
For high-income countries, and in particular the United States, a digital currency would be an important tool for the management of geopolitical risks“.