China’s Digital Yuan Could Disrupt The Global Financial System According to Simulation
A stimulated wargame held by previously high-ranking officials in the United States government has revealed what could be a North Korean missile takeover through China’s digital currency. The meeting held at Harvard Kennedy School projected a few years into the crypto space and highlighted the looming danger on the dollar’s dominance.
The attendees stimulated a U.S National Security meeting that will be held in 2021 with each playing a specific role. According to the setup, this happens a few days after North Korea has leveraged the CBDC coin to fulfill its missile test.
Neha Narula, a digital currency initiative director at MIT, said that this not only poses a security risk but a probable phase out of the dollar if the U.S do not keep up with innovation;
“The competitiveness of the U.S. dollar is a matter of national security.”
Narula added that U.S might fail to weaponize the dollar as a sanction tool if it loses its current position as the world’s peg currency.
The Dollar Peg Advantage
The United States of America has enjoyed its powerful position for a very long time given the success of its currency ‘the dollar’. Recent developments by China and Russia however indicate that this might soon change as both are slowly moving away from the dollar.
China’s digital Yuan has sparked similar conversations by financial regulators across the globe. Russia has even joined China’s Cross-Border Interbank Payment System (CIPS) in a bid to avoid U.S influence. Gary Gensler, the former CFTC chairman is however optimistic that the dollar will retain its status for a foreseeable future before any country can duplicate such an effective currency design.
The SWIFT Sanction Enforcement Debate
Towards the end of the simulation, the principals committee created an ‘event’ where North Korea hacks SWIFT to push for the CBDC adoption. Despite this, former Treasury Secretary, Lawrence Summers, stood ground that U.S should focus on improving SWIFT’s efficiency as opposed to building a digital currency. Summers literally downplayed the other financial giants’ currencies;
“Let's be honest here in the Situation Room. Europe's a museum, Japan's a nursing home and China's a jail and we don't need to worry about those currencies being some kind of major threat to us.”
In conclusion, the former high-ranking officials supported a stronger SWIFT for sanction in favor of a U.S government controlled digital currency.