Bitcoin News and Finance JPMorgan Warns Dollar Dominance Faces Risks From Political Instability, US-China Tensions Skip to main content

JPMorgan Warns Dollar Dominance Faces Risks From Political Instability, US-China Tensions

JPMorgan Warns Dollar Dominance Faces Risks from Political Instability, US-China Tensions

JPMorgan has warned of the risks to the U.S. dollar’s dominance from escalating U.S.-China tensions and political instability. The global investment bank’s strategists anticipate “partial de-dollarization,” in which the Chinese yuan gradually assumes a more significant role in global trade.

JPMorgan on De-Dollarization Threat

Global investment bank JPMorgan has warned that the dominance of the U.S. dollar could be at risk due to rising tensions between the U.S. and China, as well as concerns about political instability within the United States.

The firm’s strategists, led by Jan Loeys and Joyce Chang, explained in a report published on Tuesday that the markets are not adequately factoring in the risk of a “rapid and deep” decline in the U.S. dollar’s status as the preferred currency for global reserves and trade. They detailed:

If U.S.-China tensions intensify and we get more global fragmentation, it would likely lead to de-globalization in trade and finance … In finance, it could also lead to de-dollarization.

The strategists pointed out that the main factor that could jeopardize the dollar’s dominance is the political dysfunction within the U.S. They cautioned that this dysfunction could hinder efforts to manage the national debt and prevent the government from stabilizing the economy during a crisis. The U.S. recently averted defaulting on its debt obligations at the last minute as politicians sparred over debt ceiling limits.

Moreover, the JPMorgan strategists emphasized the potential danger arising from an intensifying rivalry between the U.S. and China, which they described as a possible “Cold War 2.0.” They noted that China’s ambitious economic reforms, which include measures like easing capital constraints and promoting market liquidity, could erode the dollar’s dominance.

JPMorgan has also warned that a shift away from the U.S. dollar or destabilizing shocks to its value could have broad consequences across multiple asset classes. The bank noted that this could lead to a decrease in the dollar’s value, lower equity multiples, and higher bond yields.

While the USD may lose its dominance, the strategists believe that it is unlikely to be completely replaced as the primary reserve currency within the next decade. Instead, they anticipate a more plausible scenario of “partial de-dollarization,” in which China gradually assumes a more significant role in place of the greenback among nations that are not aligned with the U.S.

Various individuals, including S&P Global economist Paul Gruenwald, have foreseen the potential decline of the dollar’s dominance. Nobel laureate Paul Krugman also recently said the dollar’s dominance won’t last forever but he doubts that the Chinese yuan could replace the greenback.

Do you agree with JPMorgan’s strategists about the risks to the U.S. dollar’s dominance? Let us know in the comments section below.

Comments

Popular posts from this blog

Custodial Lightning Network Service Attack Discovered by LN ‘Newbie’ — Hacker Strikes 6 LN Custodians

On September 18, a Redditor posted to the r/bitcoin forum and explained how he discovered a way to “attack [the] lightning Network’s custodial services.” The Reddit account dubbed “Reckless Satoshi” wanted to figure out if a “discrepancy between real routing fees and service’s transaction fee can be exploited for a profit.” The researcher disclosed that he wanted to see how large the damage could be and said “it is bad.” 6 Lightning Network Custodial Services Attacked, Researcher Discloses Findings to Offenders Prior to Public Disclosure A Redditor called Reckless Satoshi published a disclosure post on r/bitcoin this past Saturday and disclosed how he had found a vulnerability with routing fees and some of the Lightning Network’s custodial services. The research attack was done in good faith and after it was complete he disclosed the bugs to the offending services before publishing his findings. Reckless Satoshi used the Lightning Network (LN) attack on six different services incl...

Axie Infinity Down 40% Since Last Week’s Price High, Protocol Revenue Outshines Competitors

Last week, the game token leveraged within the Axie Infinity gaming universe skyrocketed to all-time highs, while other crypto markets remained extremely lackluster. During the last seven days, Axie Infinity’s platform token has dropped significantly in value shedding more than 12%. Meanwhile, the game platform’s smooth love potion token has slid over 8% over the last 24 hours. Axie Infinity Down More Than 40% Since All-Time High Not too long ago, the axie infinity (AXS) token was a topical conversation because it reached an all-time high on July 15. At the time, AXS managed to capture $28.93 per unit and since then it has shed 12.8% during the last seven days. The axie infinity (AXS) token is used within the blockchain-based game that involves battles between token-based creatures called “Axies.” AXS is used for the game’s governance system as well as other actions within the game. At the time of writing axie infinity (AXS) is exchanging hands for $16.70 per coin. AXS/USD on Ju...

Play-to-Earn Game From Polker (PKR) Exchange Listing – Endorsed by Akon

The Play-to-Earn NFT based Polker.Game ‘s native token $PKR has been officially listed on the popular centralized exchange BitMart. Polker.game has been in the spotlight recently as Akon, the American R&B superstar and record producer gave his official endorsement of polker stating that the “game is revolutionary” and that Polker is “hands down.. the best play to earn, NFT game in the space.”. With the BitMart listing and celebrity endorsement from Akon, Polker is perfectly positioned to become a major player in the Play-to-Earn league. Watch Akon’s Video Here What is Play-to-Earn? Although not a new concept, play-to-earn has become a trending term due to the popularity of the NFT game AXIE infinity. In the past, previous play-to-earn games have also achieved success – however, thanks to the huge amount of development in the blockchain space in recent years the gaming experience is now massively improved. Play-to-Earn games are essentially free to play and open to anyone and...

China to Crack Down on Copyright Infringement Through NFTs

Authorities in China are going after creators of digital collectibles based on other people’s works of art, the use of which was not authorized. The government offensive is part of a campaign to combat online copyright infringement and piracy with the participation of several departments. Regulators in China Move to Strengthen Copyright Supervision of Online Platforms The National Copyright Administration of China (NCAC) has recently launched a campaign against copyright infringement and piracy on the internet, together with the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Internet Information Office of the People’s Republic. A major objective of the initiative is to improve copyright supervision of online businesses by investigating cases involving the sale and distribution of infringing products on short video, live broadcast and e-commerce platforms, and promptly dealing with infringing content, the agency announced in a press r...
Blogarama - Blog Directory