Tokenization Could Both Bolster and Threaten โdollar Dominance, French Central Banker Warns
Paris – Tokenizationโค presents a complex dynamic for the U.S. dollar’s global standing, possibly reinforcing its dominance while together laying the groundworkโฃ for its decline, according toโค Agnรจs Bรฉnassy-Quรฉrรฉ, Deputy Governor ofโข the Banque de France. Bรฉnassy-Quรฉrรฉ recently assessed the impact of tokenization,โ acknowledging a โฃgrowing tension between the dollar’s continued hegemony and the emergence of a multipolarโ global economy.
While stablecoins currently appear to strengthen the dollar – offsetting a 4% decline in U.S. dollar central bank reserves since 2000 with a more than three-fold increase in dollar value through stablecoin investment in Treasuries – โBรฉnassy-Quรฉrรฉ cautioned that “unsustainability of US fiscal policy and weaponization of the currency by the US governanceโ could weaken the intrinsic appeal of the US dollar.” โขShe attributes the dollar’s current resilience to notable inertia within the international monetary system and reinforcing factors stemming from its widespread use. โ
Bรฉnassy-Quรฉrรฉ highlighted how the dollar’s dominance creates a self-perpetuatingโ cycle, making it cheaper to use and encouraging further adoption.This is exemplified by the greater liquidity available when exchanging currencies against a โsingle dominant currency versus multiple โothers, solidifying its role as a store of value, a medium of payment, and a unit of account.
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