Global reserve currency status allows for amazing latitude in terms of monetary policy.
The Treasury Department understands that there is constant demand for dollars overseas as a means to more easily import and export goods. The petrodollar monopoly made the U.S. dollar essential for trading oil globally for decades.
This means that the central bank of the U.S. has been able to create fiat currency from thin air to a far higher degree than any other central bank on the planet while avoiding the immediate effects of hyperinflation.
Much of that cash as well as dollar-denominated debt ends up in the coffers of foreign central banks, international banks and investment firms. Sometimes it is held as a hedge, or bought and sold to adjust the exchange rates of local currencies. As much as 60% of all U.S. currency (and 25% of U.S. government debt) is owned outside the U.S.
Global reserve currency status is what allowed the U.S. government and the Fed to create tens of trillions of dollars in new currency after the 2008 credit crash, all while keeping inflation more or less under control.
The problem is that this system of stowing dollars overseas only lasts so long and eventually the effects of overprinting come home to roost.
The Bretton-Woods Agreement of 1944 established the framework for the rise of the U.S. dollar. While the benefits are obvious, especially for the U.S., there are numerous costs involved. Think of world reserve status as a “deal with the devil.” You get the fame, you get the fortune, you get trophy dates and a sweet car – for a while. Then one day the devil comes to collect, and when he does he’s going to take everything,including your soul.
Unfortunately, I suspect collection time is coming soon for the U.S.
It may take the form of a brand-new Bretton Woods-like system that removes the dollar as global reserve currency and replaces it with a new digital basket system. (Something like the International Monetary Fund (IMF)’s Special Drawing Rights (SDR) currency.)
Global banks are essentially admitting they plan for a complete overhaul of the dollar-based financial world, and the creation of a central bank digital currency (CBDC)-focused system built on “unified ledgers.”
There have been three recent developments all announced in succession that suggest the dollar’s replacement is imminent.
And by “imminent,” I mean before this decade is over.
The IMF’s XC framework: A centralized policy For CBDCs
The IMF’s XC platform was released as a theoretical model in November of 2022 and matches closely with their long discussed concept of a global SDR, only in this case it would tie together all CBDCs under one umbrella along with “legacy currencies” (dollars and euros and so on).
XC is marketed as a policy structure to make cross-border payments in CBDCs “easier” for governments and central banks. Of course, it places the IMF as the middleman controlling the flow of digital transactions. The IMF suggests that the XC platform would make the transition from legacy currencies to CBDCs easier for the various nations involved.
And the IMF wants to work in tandem with other globalist institutions to be the “facilitators” (controllers) of that economic collectivism.
Not more than a day after the IMF announced their XC platform goals, the BIS announced their plans for a single record for all CBDCs called the BIS Universal Ledger. The BIS specifically notes that the project is meant to inspire trust in central bank digital currencies while overcoming the fragmentation of current tokenization efforts.
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