Jeffrey Sachs, an American economist and best-selling author, has stated that the end of the dollar’s hegemony is near and that central bank digital currencies (CBDCs) will become the basis of cross-border settlements. For Sachs, the abuse of the U.S. dollar as a geopolitical weapon is one of the factors that will contribute to its demise in the coming decade.
Sachs Predicts Dollar Hegemony’s End in Next Decade
Jeffrey Sachs, an American economist, professor at the University of Columbia, and best-selling author, has issued his opinion about the end of the dollar’s status as the dominant world currency. In statements given at the 20th annual meeting of the Valdai Discussion Club, a Moscow-based think tank, Sachs explained that the end of U.S. dollar hegemony might happen in the next decade due to the misguided use the country has given to its currency, which is currently the standard for cross-border settlements.
Sachs stated:
The epoch of the international financial system dominated by the dollar is drawing to an end, and this will happen in the next decade.
Furthermore, Sachs stressed that this process is ongoing, with the economy of the U.S. only accounting for 15% of the world’s production after producing 30% of the world’s goods after World War II.
Sachs had talked about this before, stating that the decline in dollar hegemony was a consequence of its weaponization against nations like Russia, Venezuela, and Iran. According to Sachs, the U.S. “became reliant on using the financial system for the sake of achieving geopolitical goals.”
Rise of CBDCs
Sachs detailed that this percentage will continue to decrease as other countries continue to outgrow the U.S. in the future. Nonetheless, for Sachs, none of the standard currencies available today will become a successor of the dollar.
On this, Sachs declared:
Central bank digital currencies will become the basis of payments.
Central bank digital currencies (CBDCs) are central bank-issued digital equivalents of today’s fiat currencies that offer a set of incentives for issuers, like better cross-border payment services, increased traceability, and enhanced control. According to a Bank for International Settlements (BIS) survey published in July, 24 central banks will have implemented their CBDCs by 2030 to improve their settlement capabilities.
Furthermore, according to the Atlantic Council, a U.S.-based think tank, 130 countries representing 98% of the global gross domestic product (GDP), are exploring a CBDC.
What do you think about Jeffrey Sachs’ thoughts on the future of the U.S. dollar and its possible replacements? Tell us in the comments section below.
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