Jeffrey Sachs Predicts the End of Dollar Hegemony in the Next Decade
American economist Jeffrey Sachs believes that the era of the US dollar as the dominant global currency is coming to an end. Speaking at the Valdai Discussion Club’s annual meeting, Sachs explained that the misuse of the dollar as a geopolitical weapon will contribute to its demise within the next decade. Currently, the US dollar is widely used for cross-border settlements.
Sachs stated, “The epoch of the international financial system dominated by the dollar is drawing to an end, and this will happen in the next decade.” He also highlighted that the US economy now represents only 15% of global production, compared to 30% after World War II.
Sachs has previously criticized the weaponization of the dollar against countries such as Russia, Venezuela, and Iran. He argues that the US has relied on using its financial system to achieve geopolitical goals.
The Rise of Central Bank Digital Currencies (CBDCs)
Sachs predicts that none of the existing currencies will replace the US dollar as a successor. Instead, he believes that central bank digital currencies (CBDCs) will become the foundation for cross-border payments. CBDCs are digital equivalents of traditional fiat currencies issued by central banks. They offer various benefits such as improved cross-border payment services, increased traceability, and enhanced control.
A survey conducted by the Bank for International Settlements (BIS) revealed that 24 central banks plan to implement their CBDCs by 2030 to enhance their settlement capabilities. Additionally, according to the Atlantic Council, 130 countries representing 98% of global GDP are exploring CBDCs.
Hot Take: The Future of Global Currency
Jeffrey Sachs predicts that within the next decade, the US dollar will no longer dominate the international financial system. The misuse of the dollar as a geopolitical weapon and the declining share of the US economy in global production are contributing factors. Sachs believes that central bank digital currencies (CBDCs) will play a crucial role in cross-border settlements, offering benefits such as improved payment services and increased control. As countries worldwide explore CBDCs, it is clear that the future of global currency is shifting away from traditional fiat currencies towards digital alternatives.
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