A secondary, but important impact to be expected from the more or less imminent introduction of central bank digital currency (CBDC) by half a dozen or more central banks under coordination by the Bank for International Settlements (BIS) is described by the portfolio manager of DoubleLine Capital, a large hedge fund, in a report entitled “Bilateral Digital Currency Payments and the Twilight of the Dollar.” The author is William Campbell.
https://doubleline.com/dl/wp-content/uploads/Bilateral-Digital-Currency-Payments-October-2020.pdf
“If launched, central bank digital currencies (CBDCs) … will put at risk the independence of monetary policy and what little is left of fiscal discipline within their borders of circulation. Central banks are not stopping at the replacement of money as we have known it. In conjunction with their developmental work on digital currencies proper, monetary authorities are devising a new structure for electronic payments to sweep aside the decades-long framework for payment settlements, both domestic and international. The world’s central banks and the Bank of International Settlements (BIS) envision a network of multiple cross-border payment systems featuring direct bilateral exchanges in the world’s different currencies. Such a regime would discard the decades-long mediation through the world’s reserve currency, the U.S. dollar.” [emphasis added]
Campbell concludes on the end of the dollar as world reserve currency. “Outside the U.S., however, central banks and governments appear to foresee a future untethered from the dollar. The technology for such a delinking is here or soon will be. Central banks will possess the infrastructure to match their FX reserves to the currency mix and weightings of their balance of payments – and one day displace the dollar without the need to crown a new reserve currency.
