Sharma: During the COVID-19 epidemic, American officials believed that they could print dollars in unlimited quantities without harming the reserve currency status of the dollar. But a new type of contender is emerging: cryptocurrencies.
When the COVID-19 pandemic hit, the dollar was as strong as ever. Although people talk about the United States' hegemonic position wavering, the US dollar remains dominant as a medium for international trade, an anchor for other countries to value their own currencies, and a "reserve currency" held by most central banks as savings. Before the United States, only5The coveted status of a country as a "reserve currency" can be traced back to its history14Mid century: Portugal, Spain, Netherlands, France, and England in order. Their average reign duration is94Year. reach2020At the beginning of the year, the dominance of the US dollar has continued100Year. This could have been a reason for people to question how long it can last, but there is only one issue: a lack of successors. There are competitors. Europe has been concerned about1999The Euro launched in has high hopes. However, due to doubts about the effectiveness of multiple governments in the eurozone, the currency failed to win the trust of the world. China's ambition towards the yuan is hindered by the opposite reason: people are concerned about the authoritarianism of a one party state. US officials believe that in response to novel coronavirus pneumonia（COVID-19, i.e2019The COVID-19 pandemic lockdown allows them to print unlimited amounts of US dollars without compromising the reserve currency status of the US dollar; It can allow the United States to maintain a huge deficit without causing obvious consequences. But a new type of contender is emerging: cryptocurrencies. Bitcoin and other cryptocurrencies in peer-to-peer environments that are not governed by any country(peer-to-peer, abbreviated asP2P)Running on the internet, their advocates position it as a substitute for decentralization and democratization. The popularity of COVID-19 makes the idea of selling cryptocurrencies no longer sound like pure digital hype. Due to concerns about the Federal Reserve(Federal Reserve)Central banks led by various countries are lowering the value of their currencies, and many people are purchasing Bitcoin in large quantities. Since this year3Since the beginning of the month, its price has increased more than threefold, becoming2020One of the hottest investments of the year. since2009Since its launch in, the creators of Bitcoin have been eager to turn it into a "digitalgold”Becoming a trustworthy means of storing value and providing a safe haven during turbulent times. But skeptics find it difficult to safely invest in such unstable assets: the last Bitcoin foam burst less than three years ago, and its daily price fluctuation is still four times that of gold. Skeptics are particularly prevalent among those age groups who have not grown up with digital technology. They tend to buy gold, and for hundreds of years people have been buying gold to prevent the depreciation of the fiat currency. In a recent survey, only3%The baby boomers say they hold a cryptocurrency, while the proportion of millennials is27%。 However, these numbers are still rising, and we have reason to believe that this wave of Bitcoin craze has a deeper foundation. At the same time, the US dollar is at a turning point. Last year, after decades of continuous growth, the United States' debt to other regions of the world exceeded its economic output by50%——This threshold often indicates that a crisis is about to arrive. Since then, with the US government borrowing heavily during the anti epidemic lockdown period, these debts have skyrocketed to the level of output67%, deeply trapped in a warning zone. Once the rest of the world begins to lose confidence in the US debt paying ability, the dominance of the US dollar may come to an end. The dominant currency in the past lost its reserve currency status in this way. In addition, the United States and other major governments seem to have no intention of controlling the rising deficits. Even if the epidemic passes, money printing may continue. Whether trusted or not, Bitcoin will benefit from people's growing distrust of traditional currencies. Bitcoin is also making progress on another ambition: to replace the US dollar as a medium of exchange. Nowadays, most Bitcoin is held as an investment rather than being used to pay bills, but this situation is changing. Small businesses are beginning to use Bitcoin in international trade, especially in countries where the US dollar is difficult to obtain, such as Nigeria; Or countries with unstable local currencies, such as Argentina. In recent weeks, PayPal(PayPal)And its subsidiariesVenmoStarting to store Bitcoin, with the aim of accepting this cryptocurrency as a payment method next year. The surge of Bitcoin may still prove to be a foam, but even if the foam bursts, the pursuit of cryptocurrency this year should also serve as a warning to government banknote printers around the world, especially in the United States. Don't think that your traditional currency is the only means of storing value or medium of exchange, and people will always trust it. People familiar with technology are unlikely to stop looking for alternatives until they find or invent one. And intervening in regulating the prosperity of digital currencies (which some governments are already considering) may only accelerate this populist rebellion. The author of this article is Morgan Stanley Investment Management(Morgan Stanley Investment Management)Chief Global Strategist, author of 'Ten Rules for Successful Countries'(Ten Rules of Successful Nations)A book Source:FTChinese |
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