As a means of exchange and store of value, cryptocurrencies are becoming increasingly important. States and financial organizations seek to stop its progress.
One of the most forceful forms of construction of hegemony is economic. In this sense, the United States currency is used globally between transactions from other countries. In addition, this nation has a majority vote in the International Monetary Fund and is one of the main shareholders of the World Bank.
However, in a context where China and its currency, the Yuan, want to make a place for themselves, the US has to deal with another contender: cryptocurrencies. Although there are different strategies, the only country that recognizes Bitcoin is El Salvador. Some territories created their digital currencies, while organizations such as the IMF try to maintain the dominance of the dollar as the world’s currency.
Unlike traditional currencies, cryptocurrencies are beyond the control of national and international powers. For today’s monetary system, the growth of crypto is a danger because it is basically beyond their control.
Lawless Cryptocurrencies
“Everything they say about Bitcoin is because they can’t handle it,” says Gabriel Balbo, an analyst at International Economic Relations, Technology, and Geopolitics. The global economic crises generated distrust in the traditional currencies of each country and in international financial organizations.
Given said scenario, cryptocurrencies made a place as an alternative, constituting themselves as a means of exchange and as a store of value. By not having intermediaries or classic regulatory bodies, cryptocurrencies could be defined as anarchic.
In today’s financial system, there is something called the Society for Worldwide Interbank Financial Telecommunication (Swift), a kind of connector between different international banks, in order to send and receive money on a global scale.
If the pace of cryptocurrency transactions continues its skyrocketing climb, it could wipe out Swift, and with it, the ability of some countries to lobby others. In the framework of the conflict with Ukraine, the main members of Swift partially expelled Russia from this financial system.
The Future of Crypto
One of the main objections of international financial organizations is that crypto can be used to launder illicit money and evade sanctions such as those imposed on Russia and that other countries in Latin America and the Caribbean also suffer.
For Balbo, cryptocurrencies are going to coexist with the dollar, unless the big banks get involved and regulate them. However, countries are not going to let this system grow because they lose interference in the currency.
Meanwhile, there are already state initiatives that have created or plan to create digital currencies to combat cryptocurrencies, which are or will be under the control of the central bank, or the corresponding monetary authority. For example, in March 2021, the Eastern Caribbean Central Bank launched “DCash” in Antigua and Barbuda, Grenada, Saint Kitts and Nevis, and Saint Lucia.
Earlier, in October 2020 the Central Bank of the Bahamas issued the “sand dollar”, the first national digital currency in history. Following these steps, the People’s Bank of China and the European Central Bank are studying the creation of their own currencies.
By Audy Castaneda
