JPMorgan Chase & Co warns the United States of the potential disruption digital currency could impact on the economy.
On Friday, May 22, analysts from the mega multinational investment bank, JPMorgan Chase, told Bloomberg News that “there is no country with more to lose from the disruptive potential of digital currency than the United States.”
The authors of the report include the chief U.S. economist, Michael Feroli, and head of U.S. interest-rate derivatives strategy at JPMorgan, Josh Younger.
The report shows that while the US dollar could maintain its position as a global reserve currency, there are other aspects of the currency that are “more fragile”. The two weak links are the SWIFT messaging system and the in-trade settlement.
In 2018, the US government used the SWIFT messaging system to block access to transactions originating from some Iranian banks. This caused a rift between the US and the European Union, which is an ally. At the time, it was considered a breach of EU law.
The analysts believe that if more countries find a way around SWIFT (e.g using crypto), the US would lose its global geopolitical dominance. They concluded by saying “for high-income countries and the U.S. in particular, digital currency is an exercise in geopolitical risk management.”
Back in March, an ING economist sounded a similar warning.
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