Martin Chorzempa on Geopolitics of Payments: The Dollar, the RMB, and Digital Currencies

Video & Timestamps

On Wednesday, May 28, Martin Chorzempa joined Markus’ Academy for a conversation on “Geopolitics of Payments: The Dollar, the RMB, and Digital Currencies.” Chorzempa is a senior fellow at the Peterson Institute for International Economics.

Watch the full presentation below. You can watch all Markus’ Academy webinars on the Markus’ Academy YouTube channel.

Timestamps:

[0:00] Markus’ introduction

[5:51] Payment plumbing

[21:31] Dollar dominance and sanctions

[37:02] The RMB and other challengers to the USD

[45:41] Digital currencies

[57:46] Conclusion and Q&A

Summary

• A summary in four bullets
  • The talk addressed 4 questions: (1) What role does the US dollar play in global payments, and how does this reinforce its dominance? (2) Do sanctions risk eroding the dollar’s role? (3) Could the renminbi challenge the dollar? And (4) will digital currencies entrench dollar dominance or enable alternative systems?
  • The US leverages its dominance in the dollar-based financial system to enforce sanctions globally. Countries like Russia and China have sought workarounds, though with limited success
  • Stablecoins show more promise than cryptocurrencies or CBDCs, which have seen weak adoption. They are likely to deepen USD dominance and, by broadening access to dollars, offer people worldwide a safe store of value
  • Technology matters much less than you might think. The adoption of a payment system is driven by trust and access to infrastructure, while the economics of payments are still driven by market externalities (people use what’s cheapest and most liquid) rather than by technological cost savings
• Click here for the full summary