At the ECB Forum yesterday, one of the topics was the impact of digitalization and central bank digital currency (CBDC) on monetary sovereignty. The currencies of the major economies will become even more dominant in this digital era. “That scares the heck out of smaller countries and emerging economies,” said Markus Brunnermeier, Princeton Professor and adviser to the BIS and Bundesbank.
“That’s why they’re at the forefront of introducing CBDCs in order to defend their currencies from the foreign currencies taking over,” he added.
He expects the US Dollar, the Euro and China’s Renminbi to become more dominant. For the United States, regulated stablecoins will make the dollar more prevalent in the digital space. “It is less likely that the US will be at the forefront of the CBDC development,” added Brunnermeier.
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