China-Like Fiat Digital Assets Could End The Dollar Dominance: Analysis

China-like digital fiat assets could start the fall of the dollar dominance. One of the most discussed topics in the crypto space and the major economies launching state-backed digital coins has started evolving even faster as we can see in the upcoming altcoin news.

China’s central bank sped up its plans for the digital currency electronic payment and it could launch in the next 18 months while the European Central Bank is now looking at something similar. In the meantime, Russia has been working on the state-backed crypto ruble for a few years now and Sweden has its new e-krona project. Several countries have got their plans ready including Senegal and the tiny Marshall Islands have got digital coins that are stand alongside their existing currencies as well.

These developments will change the international monetary system since today’s systems date to the Bretton Woods conference of 1944 which will create a stable trading environment that the allied nations agreed to set up the International Monetary Fund to enforce the set of fixed exchange rates linked to the US dollar which was also linked to gold at that time. The dollar has been in the middle of the monetary system even since despite the fact that the Bretton Woods has been replaced by free-floating exchange rates when the dollar/gold commitment was abandoned in the 1970s. About 40 percent of international payments and 60 percent of the world’s total foreign exchange reserves are in US dollars.

However, the China-like fiat digital currencies could change all that. The financial dominance of America means that the Federal Reserve almost acts as the central bank of the world because the monetary policy committee decides to play with the interest rates and has enormous consequences everywhere. Along with the dollar dominance, there’s the dominance of the SWIFT international payment system. However, with the increased tensions between the world’s major powers, many believe that America plays the system in their own advantage without the proper regard for the consequences ahead.

There has been a huge rise in the number of bilateral agreements between banks that allow two countries to swap the currencies directly including China. Germany and the Netherlands have also been repatriating their gold reserves from the US vaults where they have been stored.