Currency Dominance and National Power in the Era of Distributed Ledger Technology and Cryptocurrency

In: Chinese journal of international review, Band 4, Heft 1

Abstract

Currency dominance has been the symbol of national power, influence, and dominance. After the Second World War, the Dollar has maintained its unrivaled influence as a currency reserve by central banks and as a global transaction currency. Recently, cryptocurrency and the distributed ledger system were seen as a challenge. However, due to the challenge it poses to the sovereignty of nation-states, central banks have resorted to developing the central bank digital currencies (CBDCs). China is the only major economy to have tested a CBDC, a symbol of its increasing economic power and innovation. Contrary to Mearsheimer's theory of offensive realism, developments show that China can use its offensive economic capabilities to build a regional order through the belt and road initiative (BRI). With the recent release of its Central Bank Electronic Payment and the Blockchain-based Network System, China can seek to regionalize the use of its renminbi (RMB) and rival the power of the Dollar.