Analysts at the largest bank of the USA, JPMorgan Chase & Co., issued a warning saying that there is no country with more to lose from the disruptive potential of digital currency than the United States. According to the Bloomberg report, JP Morgan’s head of US interest-rate derivatives strategy Josh Younger and chief US economist Michael Feroli warned that the disruptive nature of digital currencies could harm the USA the most.
Digital currencies could disrupt the global dominance of the US dollar.
The analysts at the JPMorgan Chase & Co wrote that this revolves primarily around US dollar hegemony. Issuing the global reserve currency and the mode of exchange for international trade in commodities, goods, and services convey immense advantages. However, the analysts do not anticipate that the dollar losing it would lose its status as global reserve currency anytime soon. But they pointed to some of the weaker links in the currency’s dominance, which include in trade settlement and the SWIFT messaging system.
JP Morgan analysts say taking the initiative on digital currencies is key for the US.
For the United States, in particular, JPMorgan Chase & Co underscored that “digital currency is an exercise in geopolitical risk management.” Managing this risk would not necessarily preclude a digital currency component. However, the analysts opined that offering a cross-border payment solution built on top of a digital dollar would, mainly if designed to be minimally disruptive to the internal financial structure, be a very modest investment to protect a vital means to project power in the global economy. China is getting ready to become the first major nation to issue its digital currency dubbed as DC/EP. Several from the crypto industry have claimed that the Chinese digital Yuan could threaten the global dominance of the US dollar.