Cryptocurrencies and China Imperil the Reserve Currency Status of the US Dollar

Source: Ludwig von Mises Institute
by Alexander Herborn & Gunther Schnabl

“For the past twenty to thirty years, the Federal Reserve and other major central banks have been steadily lowering interest rates and purchasing large amounts of government bonds as well as other assets such corporate bonds or asset-backed securities. This has undermined the confidence in the US dollar and the euro as the world’s leading reserve currencies. A flight into tangible assets has set in, so that stocks, real estate, and precious metals have risen sharply in price. Competitors for the ‘exorbitant privilege’ (Giscard d’Estaing) of the reserve currency have appeared, as those who issue the global reserve currencies benefit from virtually unlimited borrowing opportunities and immense profits from money creation. The competition has three dimensions. Firstly, decentralized private digital currencies have emerged in contrast to the public monopolies in creating money.” (07/08/21)