Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Donald Trump’s China Nightmare Is Coming True For The U.S. Dollar

Donald Trump’s China Nightmare Is Coming True For The U.S. Dollar

U.S. president Donald Trump's power struggle with China was perhaps the defining feature of his presidency, until the coronavirus COVID-19 pandemic struck. The pandemic—and subsequent lockdowns—crashed global markets and pushed investors around the world toward the safety of the almighty dollar.
But the U.S. 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.

"We have only one real currency in the U.S.A., and it is stronger than ever, both dependable and reliable," Trump said last year in a Twitter tirade against Facebook's libra, as well as bitcoin and cryptocurrencies—scarce digital assets that were the inspiration for libra.

"[The dollar] is by far the most dominant currency anywhere in the world, and it will always stay that way."

Libra is expected to launch later this year, though somewhat reduced from Facebook chief executive Mark Zuckerberg's original vision.

Some U.S. lawmakers have proposed the creation of digital dollars and so-called FedAccounts as part of stimulus bills designed to offset the economic damage wrought by coronavirus-induced lockdowns.

These have so far been excluded from final bills and may never get through a divided Congress—perhaps leaving Facebook's libra as a defacto digital dollar.

"The big battle for global financial supremacy could be between the digital yuan and Facebook's libra dollar, a digital version of the U.S. dollar," said financial author and trading veteran Glen Goodman, who made a name for himself by successfully navigating stock markets during the 2008 global financial crisis and has been closely following the development of central bank digital currencies.

"Both of these currencies may be launched as soon as this year and will make it quicker, cheaper and more efficient to buy, sell or transfer money from place to place. China will pull out all the stops to convince international trading partners to switch from the dollar to their new currency. If they manage to lure enough users, the U.S. dollar could be in deep trouble."

China is expected to begin internally testing a digital yuan with its four largest commercial banks this month and has lined up a raft of international corporate partners including coffee chain Starbucks SBUX and fast food giant McDonald's MCD .

Battle lines are now being drawn but the war could be measured in decades and not years.

"Given the risks inherent to such a transformation, China will phase in the CBDC very gradually," journalists at the widely-respected Economist newspaper wrote this week, pointing to analysis from Citic Securities that estimates it will take "several years for the digital yuan to replace just about 10% of all physical cash in China."

Donald Trump's first term as U.S. president may have been marked by his trade war with China; but if he wins a second he could go down in history as the president that saw the U.S. dollar fall from grace.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
Thirteen Killed in Russian Attacks Across Ukraine
High-Profile Incidents and Political Developments Dominate Global News
Netanyahu Accuses Western Leaders of 'Emboldening Hamas'
Ukraine and Russia Conduct Largest Prisoner Exchange of the War
×