A growing part of me is witnessing not just day-to-day drama, but sensing potential seismic shifts in the Western World order on things like defense and finance. Moving away from a USD-oriented global payment system may become a thing at some point, maybe? I certainly appreciate the EU's concerns here -- and as I recall, China, India, et.al. were exploring/developing a regional currency to diversify some away from the USD several years ago. (We're already seeing the EU ramp up its defense expenditures, and Canada leapfrogging the US in obtaining bleeding edge systems.)
Are we heading toward some kind of inflection point and global realignment in the coming years?
Per BBG....
Europe needs a digital currency to safeguard against threats from new forms of money like stablecoins, and reduce reliance on US payments firms amid heightened political tensions, European Central Bank Chief Economist Philip Lane said.
A digital euro would “limit the likelihood of foreign-currency stablecoins gaining a foothold as a medium of exchange in the euro area,” Lane told a conference in Cork, Ireland. “The digital euro is not just about making sure our monetary system adapts to the digital age. It is about ensuring that Europe controls its monetary and financial destiny, against a backdrop of increasing geopolitical fragmentation.”
European interest in the stablecoin market, which is overwhelmingly tied to the dollar, is “increasing rapidly,” Lane said Thursday. He also highlighted the current dependence on US payment-card providers Visa and Mastercard, as well as technology companies including PayPal, Apple and Google.
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Earlier on Thursday, President Christine Lagarde told lawmakers in Brussels that the continent must accelerate progress on a retail and a wholesale digital euro, which would bolster sovereignty and lower vulnerabilities.
President Donald Trump is alarming European politicians not only with his tariff threats and efforts to strike a peace deal over Ukraine but also by promoting dollar-backed stablecoins worldwide as part of a broader crypto strategy.
Comments
You are close to the subject matter expert we have here and so help us understand.
How would having a separate CBDC (Central Bank Digital Currency) help in getting away from USD?
Both EURO and USD are already mostly 0s and 1s. China said they will develop a CBDC during Trump 1.0 and I have not seen anything yet from them.
The US FED spent a lot of time thinking about developing a separate CBDC and nothing came of it. I think it was a pet project of Lael Brainard and as far as I know the Republican Congress wants it killed and Powell is eager to oblige. With the crypto President in charge for the next four years, the US project will be on ice if not killed permanently.
I still do not understand why a CBDC is necessary.
I've been telling my wife: history shows infrequent but sometimes seismic shifts in the general order of the world every so often. I think that we are on the cusp of such an event.
Balu, I might've misspoke. I didn't mean to equate a cryptocurrency with getting away from the USD, and I agree they are mutually exclusive. What I meant to say is that moves like this, even if exploratory, can presage eventual seismic shifts in the world order if they ever came to pass.
To wit: worst case, if the world ever moved away from the USD (which it really depends on) I'd posit the strength/trustworthyness of the dollar would plunge -- regardless of whether that's done by a cryptocurrency or other regional/global currency.
IMO, people's assessment of cause and effect are backwards in this case.
Trump agenda (succeed or fail) points to a weaker dollar. I expect USD to be lower three years from now. For a society addicted to catchy phrases (so they do not have to process), "strong dollar" has become a slogan leaders pitch and people eat up but really what the administration would shoot for is a stable dollar and not a strong dollar.
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As to realignment, we have elections every two years. You will need a few successive elections to go in a specific policy direction for a re(or mis)alignment to take hold. Somethings that have been evolving for the last 8-10 years are somewhat irreversible. But then there are other things that are ideas and have not yet taken root in the society. Whether these ideas take root or not depends on who is providing leadership and not just leaders.
If there is a Democratic party equivalent of Project 2025, please share the link. I want to read.
As you know, if the general public knows about something happening for the last 8-10 years means the DC apparatus (does not matter the party affiliation) has been at it for much longer. As an example, I helped my ex-employer in 2018 to exit China by divesting their Chinese business to a global Chinese company.
We have 800 military bases (of all sizes and kinds) in 80 different countries. Has there been a significant reduction of those (not counting Afghanistan) in the last 8-10 years or is there a firm expectation of significant reduction in them? Watch this metric. Closing USAID is not it. Reciprocal Tariffs is not it. We have to separate / distinguish evolutionary from revolutionary changes.
I am just concerned that we in this forum consume way too much of what the media and whoever (e.g., Think Tanks) wants us to consume. (I am aware that this forum, more than any other investing forum I had ever visited, has a large group that does not rely on stock investments to meet their retirement (sustenance or charitable) goals and they can afford pursuits other than investing.)
Good weekend.
This FT* article may be of interest related to this discussion (free link) and could serve as interesting food-for-thought. https://archive.is/UNFdg
* most certainly not 'mass market' media for the general public
I hope for the country’s sake the Dem leadership are working on their Project 2027 and 2029. The knock on them is they are perceived as secretive and not having similar firm policy pronouncements ahead of the elections is not going to help them get back in the saddle, especially given their abysmal marketing skills.
I agree with the headline comment right below the title to the article. I am an extremely slow reader and the article is too long for my allocation of time as I do not like to speed read anything but based on that headline comment alone, I can endorse reading it. A good reco from you.
So far what this Administration has done was all promised beforehand. how they are going about should not be a surprise based on 1.0 and then extrapolate adding the intervening events. The biggest surprise to me is people’s reaction, which tells me that Americans are an incorrigibly optimist (or selfish) bunch in expecting different. I want to believe the former.