<center><img src="https://cdn.benzinga.com/files/imagecache/1024x768xUP/images/story/2012/powell_testimony_2018_42753534974_2.jpg" alt="Shared From DLIKE" /></center><br><p>This article lists out the following three (3) challenges posed by digital currencies to Central Banks and Traditional Banks:</p><blockquote><p>First, incumbents tend to wait too long to take aggressive action.</p><p>The Federal Reserve and the ECB are unlikely to have a functional CBDC in place until at least 2025, Colas said. Meanwhile, in the last decade, the global cryptocurrency market has grown to $1.3 trillion in size.</p><p>Second, incumbents tend to focus more on defending territory rather than taking risks to innovate the business.</p><p>Part of the role of central banks is to ensure economic stability, so it's understandable why they wouldn't necessarily be keen to embrace the Silicon Valley mantra of "move fast and break things," Colas said. </p><p>Third, incumbents often fail to see the big picture. While the Federal Reserve has focused on ensuring the integrity of the U.S. dollar, Colas said the proliferation of tech-enabled payment systems, smartphone apps and digital currencies suggests the basic definition of what defines "money" in the public eye is already changing right under the Fed's nose.</p></blockquote><p>Besides the above which apply equally to both Central Banks and Traditional Banks, Central Banks face a plethora of public policy issues such as challenges to formulating monetary policies, fair competition, financial stability, and, possibly, the international monetary system itself arising from private entities issuing money in the form of cryptocurrencies. </p><p>In addition, the issuance of CBDC by sovereign countries could eventually erode the status of the U.S Dollar as the primary reserve currency of the world.  <sub>U.S Sanctions By JojotoRudess; License: CC BY-SA 4.0</sub> The CBDC may also have the effect of circumventing the sanctions imposed on individual countries or companies within a country, which will be a challenge for the Central Bank of the country imposing the sanction. </p><p>In fact, circumventing sanction using CBDC may be the primary focus of the countries that are often the subject of sanctions by the U.S or the UN. </p><p> </p><br><center><br><a href="https://dlike.io/post/@devann/3-digital-currency-challenges-faced-by-central-banks-traditional-banks">Shared On DLIKE</a><hr><br><a href="https://dlike.io/"><img src="https://dlike.io/images/dlike-logo.jpg"></a></center>
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>>In addition, the issuance of CBDC by sovereign countries could eventually erode the status of the U.S Dollar as the primary reserve currency of the world This is quite dire to the USA . Is the US helpless over this situation ?? Isn't any maneuver possible to mitigate the effect of independent nations issuing their digital currencies?? Is the USA stiffled thereby ??
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Hi @whyaskwhy, Here is [the list of the major reserve currencies](https://data.imf.org/regular.aspx?key=41175) of the world. In my opinion, there are three events that could shift the positions. First - The reliance on crude oil for our energy needs. When the world finally transitions from crude oil to other sources of energy and the world's reliance on crude oil is minimal, the agreement the U.S has with Saudi Arabia to sell oil in the U.S Dollar, would have no beneficial effect for the U.S. One of the main reasons why the U.S Dollar is still the reserve currency is because the Saudis are selling their crude in U.S dollars. Second - If and when Bitcoin becomes the reserve currency of the world. It would have sounded preposterous to say so, say, five years ago. Today, it is not so, although it looks a bit outlandish. How it will turn out in the future is hard to predict. Third - If and when China becomes the world's superpower and major trading partner of the world. China's ambitions are obvious. They want to become a superpower. Historically China has not been a country that showed interest in imperialism or colonialism. That was because of Chinese believe in Taoism, Buddhism and Confucianism. But all that changed with the advent of Communism in China. Although, the Chines people, by and large, probably still are influenced by these philosophies to some extent, their leaders are not. This non-believe in their traditional believe systems, allows their leaders to skirt around imperialism although communism per se, in my understanding, is not imperialistic. China's rush to create a digital yuan is aimed at to, eventually, replace the U.S Dollar as the primary reserve currency. They can easily do so, if and when China becomes the world's superpower and the major trading partner in the world. China becoming the world's superpower and the demise of crude oil as the major source of energy might just coincide. That would, all else being the same, certainly be a disaster for the U.S.
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