But will bitcoin survive? History shows that the reliable store of value has to have a government standing behind it. Europe has made progress in drawing a line under its crisis and the economy is growing again.
We will see. But this book is more optimistic about the euro than I had been previously.
It will depend on whether people view US Treasury bonds as no longer safe assets or they come to view renminbi-denominated securities as unsafe because the rule of law was not reliable in China. Digital currencies are a promising way of reducing transaction costs and could be a more efficient means of payment.
What will its loss of status be like? As a result, the American economy benefits from a currency that greases the wheels of the global financial system.
What are the prospects for the renminbi becoming a reserve currency? Will central bank digital currencies crowd out private digital currencies like bitcoin? There are four things you need in order for your currency to play a global role: Maybe China becomes the attractive issuer. Quartz spoke to Eichengreen in London on what to expect if the dollar loses its hold over global financial markets.
You want a strong and reliable government that implements predictable policies that are investor friendly. Central banks around the world hold a large portion of their reserves in the US currency, while private companies use it for international transactions.
If the policies of the governments and central banks responsible for these currencies remain sound and stable, this can be a smooth evolution. Will that without democratization be enough to support a leading role for the renminbi?
There would be a global liquidity shortage. It was a sick economy for an extended period after the Second World War, with tremendous debt and financial problems.
Where do bitcoin and other digital currencies fit in to this future? In the casino, but not elsewhere. The US is not in that position now but it will depend on how good or bad economic management is. What was wrong with the traditional theory? In How Global Currencies Work: The speed of the shift might depend on the actions of Donald Trump, Eichengreen says. This book dismantles a long-standing theory about the global currency system. Meanwhile, the euro and the renminbi have not had time to step up and a global liquidity crisis develops that takes globalization down with it.