There has been a massive rise in the number of bilateral agreements between central banks that allow two countries to swap currencies directly, a large number involving China. Meanwhile, a number of countries, including Germany and the Netherlands, have been repatriating their gold reserves from vaults in the US where they had long been stored. From a report: Yet by comparison, major sovereign digital currencies based on blockchain technology would be revolutionary. Blockchains are encrypted ledgers for storing information that are decentralized rather than being under any country's or company's control. When applied to international payments, this offers the prospect of much more transparent and cheaper transactions than SWIFT. It could cut the payments time lag from a couple of days to one second, and the cost from 0.01% to almost nothing. It will have the capacity to handle far higher volumes of payments, partly since they won't require bank accounts or even internet access.
Cryptocurrencies like Bitcoin and XRP have been a good experiment in using blockchains for international payments. Yet when countries issue equivalents of their own, these will have even more advantages. They will be backed by states, and completely decentralized cryptocurrencies like Bitcoin will not be able to compete with this. While technological change has been incredibly fast in the information era, the system of international payments has lagged behind. But once sovereign digital currencies start taking off, this will suddenly change. Just like smartphones quickly eliminated most old cell phones, no countries will be able to reject blockchain payments for long. So while, for example, the US Treasury Secretary Steve Mnuchin recently said that his country does not see itself launching a digital dollar in the next five years, there will be a moment when the political centre of gravity will shift and everyone will join the revolution. After the 5G network and the Internet of Things really mushroom in the next couple of years, it will be possible to replace the existing system even faster. This will be the beginning of a new international monetary era.
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