The first part of this study analysed the competition between USD, RMB and EURO and presented the challenges for China and Europe to develop a genuine international currencies, having the capacity to compete with the USD (see Part 1: “FX wars vs. currency wars: SD vs. EUR vs. RMB vs …”; DP # 43, January 2020)). However, currency competition goes well beyond the “simple” competition between sovereign currencies (USD, EUR, RMB, JPY, CHF…).
The advent of private digital currencies and very soon the first central bank digital currencies represent an important and new phenomenon: it shows that the world has entered a “total digital (disruptive) era”, and currencies are no exception. In less than 10 years, additional forms of monies have surfaced: central banks digital currencies (a few), digital currencies (plenty), local currencies (some) and investment money (major projects ongoing), while electronic monies are gaining ground (vs. cash). Digital currencies are more financial assets than currencies, but electronic and digital currencies are gaining ground for different reasons:
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