China’s work on its central bank digital currency (CBDC) has stepped up in recent months. The project, which has been in production since 2014, is inching ever closer to realization, and it has some critics concerned about what that might mean for the dollar’s de facto reserve currency status.
For Garlinghouse, China amping up its endeavors on the CBDC is a call to action. In an interview with Fox Business, the Ripple CEO urged the U.S. to take the lead in the wake of China’s proposed crypto. Analogizing the rise of cryptocurrencies to the tech boom in 2000, and the forward-facing stance the U.S. took back then, Garlinghouse alludes that American influence could yield positive results.
“These are new profound technologies and the US needs to be a leader in this space.”
Turning to the motives behind China’s venture, the conversation shifted to the potential of the CBDC subverting U.S sanctions on the country. For Garlinghouse, this is a key component of China’s plan.
“Part of the opportunity that they see is, how can the dislodge the US dollar.”
This concern was recently raised by two members of U.S. Congress – French Hill and Bill Foster. At the end of last month, the pair wrote a letter to Fed Chairman Jerome Powell urging the U.S. to take action to preserve the primacy of the greenback, in the wake of rising adoption CBDCs.
Hill and Foster aren’t the only ones troubled by the mounting wave of fiat-based digital currency. In mid-September, European Central Bank (ECB) member Benoit Coeure noted that ventures such as China’s CBDC could potentially become a “contender for the Iron Throne of the dollar.”
Garlinghouse says that there remains a risk of “falling behind.”
Offering a solution, the Ripple CEO relayed that by harnessing the potential of crypto, the U.S. may not be behind for long:
“We do have some of the leading companies here based in the united states doing things around crypto. Ripple has been a leader in this space, I think there’s an opportunity to get behind some of these efforts.”
Inevitably, the conservation digressed to domestic crypto policy. While Galringhouse may wish for government intervention it’s doubtful he’ll see it anytime soon. In fact, he blamed the government’s inaction on XRP classification for the cryptocurrency’s poor year-to-date performance.
This article was edited by Sam Bourgi.
Last modified: October 9, 2019 19:35 UTC