Global De-Dollarization: Bitcoin’s Role in a Shrinking Economy
• The US dollar has been the global reserve currency for many years due to its open capital account and devotion to free trade.
• However, the US Federal Reserve is responsible for keeping the global economy intact and providing the USD when necessary.
• BitMEX co-founder Arthur Hayes believes that as the dollar declines, more countries will consider using Bitcoin as a savings vehicle.
Global De-Dollarization and the Role of Bitcoin: Arthur Hayes
US Dollar Dominance and Decline
The US dollar has been the global reserve currency for many years due to its open capital account and devotion to free trade. These create additional demand for the USD, as they allow Asian countries to purchase American assets with it, while other nations can use it to buy cheap Asian products. Additionally, being the issuer of this currency means that the US Federal Reserve and Treasury are responsible for keeping up with global economic demands – even if it stokes inflationary pressure on their own domestic economy. According to BitMEX’s co-founder Arthur Hayes, these conditions make it so “trillions of dollars of Asia’s wealth depend on the good graces of American politicians” – meaning that any shift in power could lead to major implications worldwide.
Bitcoin as an Alternative
Hayes believes that as more countries become wary of relying on USD holdings, they may start considering Bitcoin as a savings vehicle instead. This cryptocurrency isn’t tied down by any government or central bank policies, giving individuals increased control over their wealth.
Benefits Of De-Dollarization
De-dollarization would also mean that foreign governments wouldn’t have to worry about fluctuations in exchange rates or rising prices due to inflation created by printing money out of thin air.
Drawbacks Of De-Dollarization
On top of this, de-dollarizing could also be a detriment in times when export demand is low as other nations may not want/be able to purchase American goods without easy access USD reserves.