According to DoubleLine Capital forecasts, thanks to the launch of digital currencies by global central banks, it will be possible to send the flow of liquidity directly into the consumer economy, bypassing commercial banks and parliaments. Moreover, it will greatly increase the speed of money circulation. Both of these factors will contribute to a sharp acceleration of inflation, which the world central banks did not even imagine.
Bill Campbell, asset manager at DoubleLine Capital, says the World Central Banks and the Bank for International Settlements intend to create a network of multiple cross-border payment systems that will conduct direct bilateral transactions in multiple currencies. As a result, there will be no need for the US dollar. In other words, the American dollar and its status as a reserve currency may disappear.
Experts remind that the US dollar is at the very center of the world's financial system due to the fact that it is the main means of payment in the international SWIFT system. But SWIFT is under the same pressure as the US dollar, because the world central banks are going to create their own digital currencies.
Why are so many banks interested in digital currencies? They are cheaper, faster, and more transparent cross-border means of payment. This will support not only economic growth, but also international trade and global development.
Russia and China have already created their own payment systems, which are competitors of SWIFT. These countries are looking for opportunities to increase mutual settlements with trading partners in national currencies. In other words, the US dollar is in big trouble.
It should be borne in mind that the United States' imports exceed its exports. To stabilize the currency, the US needs as many foreigners as possible to invest their money in US assets. As soon as foreigners stop doing this, the US dollar will lose in value.
Moreover, thanks to the CBDC system, many countries in the world may forget about the US dollar reserves. They will use the currencies of countries they are trading with.
The US dollar has been the leading currency for 80 years, and the US has become overconfident as a result. It looks like the era of the greenback is coming to an end. Many countries of the world and their central banks suggest a future where the US dollar does not play a major role.
Moreover, the result of the US presidential election held today plays an important role in the American currency exchange rate. Experts believe that Biden's victory does not bode well for the USD.
By the way, today, the US dollar fell in value.
The euro rose by 0.2% against the US dollar to hit 1.1662. At the same time, the US dollar went lower by 0.1% against the Japanese yen to settle at 104.56.
AUD/USD gained 0.1% reaching the 0.7059 level.
GBP/USD grew by 0.2% to trade at 1.2942.
The US dollar index, which measures the US dollar against a basket of six other currencies, lost 0.2% to settle at 93.915.
Despite the US dollar rally thanks to stimulus from the US government, the dollar index is still about 9% below its March high. What's more, the dollar is approaching its biggest annual drop since 2017.
