The digital currency may threaten the geopolitical power of the United States: JPMorgan

Цифровые валюты могут угрожать геополитической власти США: JPMorgan

“No country that will not suffer from the destructive potential of the digital currency, as the United States of America,” claim analysts at JPMorgan Chase & Co.

Warning analysts of the largest US Bank – JPMorgan Chase announced the publication Bloomberg News from may 22.

The authors of the report, including the head of JPMorgan’s strategy on interest rate derivatives Josh Yunger (Josh young) and chief US economist Michael Feroli (Michael Feroli) said:

“First of all it is connected with the hegemony of the US dollar. Issue the world’s reserve currency and medium of exchange for international trade in goods and services gives a huge advantage.”

Although analysts suggest that the dollar will soon lose its status as the global reserve currency, they pointed out some weaknesses of the dominance of foreign currency – including trade and settlement system for the exchange of SWIFT messages.

SWIFT was a key lever in the application of sanctions against the Iranian regime, alignment with the US administration and termination of the access of Iranian banks in 2018. That caused tension in relations with the European block, where the Finance Ministers tried to avoid the constraints of the network cross-border payments, but failed.

JPMorgan notes that if countries were able to bypass SWIFT, USA would be unable to achieve their strategic geopolitical objectives, which partly depends on the global dominance of the dollar.

Analysts believe that the initiative of digital currencies is a key issue for the United States. In particular, financiers stressed that “digital currency is a training in the management of geopolitical risks.”

However, the management of these risks does not necessarily exclude use of the component of the digital currency. Analysts pointed out:

“Offer solutions for cross-border payments based on the digital dollar, especially if it has been designed with minimal disruption of the structure of the domestic financial system, it would be a very modest investment for protecting key means for projecting power in the world economy.”