The Real Use Case for CBDCs: Dethroning the Dollar

It’s all a part of Pozsar’s “Bretton Woods III” imaginative and prescient, the place the greenback in the end loses its hegemonic standing over the subsequent decade. Importantly, he sees a special final result from that of the British pound’s lack of reserve standing within the early twentieth century, when the U.S. greenback merely supplanted it. As a substitute, he predicts a multi-currency world the place nobody forex is dominant, a consequence made potential due to CBDC clearing mechanisms, which negate the necessity for reserve forex intermediation. Negotiating counterparts might want to agree on which of their two currencies to denominate their commerce deal in, however they received’t must default to the greenback, or another common normal, for precise settlement.