The dollar will play a lesser role due to its weaponry, digital currencies, says economist Jeffrey Sachs Cryptocurrencies and ICOs

In the next decade, the US dollar will play a much less dominant role than it does today, according to Jeffrey Sachs. The renowned economist listed some factors of the declining state of the dollar, such as its use as a political weapon by Washington, the introduction of currencies such as the digital yuan, and the reduction of the United States’ participation in the global economy.

The lower participation of the United States in the world economy will affect the dollar

The role of the US dollar will naturally diminish as the United States’ share of the planet’s economy shrinks and settlements in other currencies take hold, predicted the economics professor and director of Columbia University’s Center for Sustainable Development. , Jeffrey Sachs.

Speaking at an online session of the latest China Columbia Annual Summit on Friday, Sachs noted that the international payment system is currently based on the dollar, with up to 60% of foreign trade deals made or denominated in US fiat currency. , and about half of foreign exchange reserves based on it.

At the same time, the US share of the global economy is around 15%, in terms of purchases. So the role of the dollar is much bigger than the role of the US economy, Sachs explained. He described the role of the greenback as “a bit historical” and reflecting the power of the United States in the 20th century.

Quoted by the Chinese news agency Xinhua, Jeffrey Sachs also noted that with the United States turning its currency into a political weapon, by confiscating the foreign exchange reserves of Russia, Venezuela and Iran, many countries do not want to keep their money in dollars. not anymore. He elaborated:

They don’t trust the United States and they think that the United States is going to confiscate their currency, especially if they have some kind of foreign policy disagreement with the United States.

The role of currencies such as the renminbi, rupee and ruble will increase in the future

The economist further noted that the current role of the US currency is largely due to the dollar-based commercial banking system, as payments are usually settled through commercial banks. However, Sachs is convinced that in the future payments will be settled through central bank digital currencies (CBDC).

The digital yuan (e-CNY), the digital version of the renminbi issued by the People’s Bank of China, is now undergoing retail-level trials within the country, but Sachs believes it will eventually become an international payment system for transactions. crusades. border settlements.

Russia, China, Saudi Arabia, India and South Africa have been looking at alternative payments because they don’t want to use the US dollar-based banking system, and according to Sachs, that’s understandable. The role of the US dollar will decrease and the role of the renminbi, rupee, ruble and other currencies will increase in the future, he concluded.

Jeffrey Sachs is known for his work as an economic adviser to governments from Latin America to Eastern Europe, where he supported the transition to market economies. Two years ago, Sachs criticized bitcoin for offering “nothing of social value,” but acknowledged some of the benefits of using digital currencies, including more efficient transactions.

Do you agree with the predictions of the American economist Jeffrey Sachs? Share his thoughts on the subject in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy Eastern European journalist who likes Hitchens’ quote: “Being a writer is who I am, more than what I do.” In addition to crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.