Donald Trump's plan for a strategic bitcoin reserve (SBR) has sparked debate about its feasibility and potential impact on the global economic order. While the proposal faces challenges, including opposition from the Federal Reserve and uncertainty over political support, it highlights a broader shift towards decentralized finance and the rise of cryptocurrencies as a potential alternative to traditional reserve currencies.
Cryptocurrencies promise to be central to Donald Trump’s economic policies in his second term as US president. Arguably his most controversial proposal is the creation of a strategic bitcoin reserve . This would involve the US buying up large amounts of the cryptocurrency over the coming years to hold as a reserve, similar to the country’s strategic petroleum reserve.
But a more likely first step is to designate the approximately 207,000 bitcoin already held by the United States as a reserve to be held by the US Treasury. Any additional large purchases of bitcoin would require a law change and the assent of the US Treasury, which is currently opposed. Another popular argument is that the monetary value of the SBR could appreciate rapidly and hence pay down US national debt. This too is largely a theoretical and untested argument however, and the precise mechanisms remain unclear.
The fixed-rate system was abandoned in the 1970s, however US dominance was retained through the petrodollar system where oil was priced in dollars. The dollar’s role as the world’s reserve currency and the US’s influence in international institutions like the IMF and World Bank reinforced this dominance.
CRYPTOCURRENCY ECONOMIC POLICY DIGITAL GOLD US DOLLAR GLOBAL RESERVE CURRENCY
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