Central Bank Digital Currencies and The Global Financial System: The Dollar Dethroned?

Forthcoming in Capital Markets Law Journal

UNSW Law Research Paper No. 22-34

53 Pages Posted: 21 Oct 2022

See all articles by Ross P. Buckley

Ross P. Buckley

University of New South Wales (UNSW) - UNSW Law & Justice

Mia Trzecinski

Sch of Private&Commercial Law

Date Written: October 21, 2022

Abstract

The US derives enormous economic benefits from issuing the dominant global currency. This exorbitant privilege has been put at risk by the combination of the 2022 sanctions against Russia and new technological developments, specifically Central Bank Digital Currencies. CBDCs promise faster, cheaper, and better ways to settle international trade and financial transactions. CBDCs are coming and are likely to underpin major changes in the global financial system. We analyse the potential impacts of CBDCs which range from entrenching US dollar dominance, to fragmenting the system into two or more currency blocs, to enabling a multipolar system characterised by cooperation not competition. The first two impacts are the most likely and are those for which policymakers need to begin now to prepare.

Keywords: Central Bank Digital Currencies, Sovereign Digital Currencies, Digital Yuan, e-CNY, Digital Dollar, SWIFT, CHIPS, Payments, US-China, Sanctions, Financial Technology, Currency Competition, Fragmentation

Suggested Citation

Buckley, Ross P. and Trzecinski, Mia, Central Bank Digital Currencies and The Global Financial System: The Dollar Dethroned? (October 21, 2022). Forthcoming in Capital Markets Law Journal, UNSW Law Research Paper No. 22-34, Available at SSRN: https://ssrn.com/abstract=4254354

Ross P. Buckley (Contact Author)

University of New South Wales (UNSW) - UNSW Law & Justice ( email )

Sydney, New South Wales 2052
Australia

Mia Trzecinski

Sch of Private&Commercial Law ( email )

Kensington, New South Wales 2052
Australia

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