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Your guide to what the American elections mean 2024 for Washington and the world

Four years ago, the bank for international settlements (BIS) – Central Bank – revealed the ugly “MBRIDGE” title project.

This aims to create a digital currency for the Central Bank across the border that connects the central banks in China, Hong Kong, Thailand, the United Arab Emirates and the Kingdom of Saudi Arabia (the last).

You may think this is mysterious. If so, think again: The genius genius genius project symbolizes a larger battle that can be deeply concerned during the era of US President Donald Trump.

More specifically, last fall, just before the American elections, repeated I was unexpectedly withdrew From mbridge, actually controlling the assignment of China and the rest. redundant Claim This was just because he reached the “minimum of viable products”. But a few of them think this. The Americans demanded [the BIS] One of the participants tells me, “stop because it represents a threat,” explaining that Washington is concerned that it “may be used to evade [dollar] Penalties.

While Agustín Carstens denied that there would be details of it – not the least of which is that Trump cannot be denied in the monetary war: on the social truth last month Repeat the threats To impose “100 % tariff” on countries trying to “replace the great US dollar” with new operations or payment systems.

So investors must see what is happening after that. Because while Trump’s threats about the customs tariff that was receiving newspaper headlines recently, this less visible battle around money revolves deeply. After all (As I noticed before) This is the global financial system based on the dollar is the true source of the American dominant power today, which Washington wants to defend.

On paper, Trump has no cause of concern. Modern data From the International Monetary Fund it shows that the dollar represents about 58 percent of the Central Bank reserves. This is a little less than it was at the beginning of the century, but the recent diversification often included smaller currencies – not competitors such as the euro or Renminbe.

The most exciting fast data indicates that 49.1 per cent of all payments It was in dollars last year, the highest level in 12 years.

But there are three decisive warnings. First, the central banks collect gold at a “advanced pace”, as the World Gold Council recently indicated. This indicates the desire to hedge from being exposed to the dollar.

Second, the fast data may be somewhat misleading because the activity is swelling outside the western platforms. China builds a cross -border bank payment system. This is small and new, but it contains 160 members and the volume of transactions has jumped by 80 percent since 2022.

Third, it seems that the financial weapons in Washington are feeding – do not stop – the efforts of others to imagine alternatives. For this reason, MBRIDGE: If these digital tubes work at all and the size of (“if” large), then this would challenge the “axis and speaking” system that focuses on the American Federal Reserve.

How will Washington respond? Chris Giancarlo, head of the commodity futures trading committee during the first Trump administration, hopes to use the islands-which policies that make the dollar use completely convincing to non-Americans. This means defending the good economic “values”, as he told me, and embracing more cyber innovation. The Dilm Dilm Project, which participates in determining how to do this next week, will explain.

This is prominently reasonable. But it seems that Trump is considering using sticks. Last month, he issued an executive order prohibiting any use of the central bank’s digital currency in America, as they “threaten the stability of the financial system, individual privacy and the sovereignty of the United States.”

Instead, he defended Bitcoin (it does not matter that this is seen as hedging the dollar). More importantly, it also supported the “legal and legitimate and legitimate” Stablecoins growth and legitimate growth around the world. “

This may seem strange, not at least because it opposes the European Central Bank. Some of the norms will undoubtedly attribute her to the fact that Howard Lootnick, the Trade Secretary, Help Tether, the largest current currency.

However, there is another factor, too: Trump believes that Stablecoins may be a secret weapon to promote more – no less than the dollar. “It is very good for us,” anyone tells me. This is because Stablecoins in the twenty-first century-such as the European market in the twentieth century-allows transactions in the marine dollar free of hard wild regulations. This appeals to many financiers who wrestle with geopolitical risks (even if Stablecoins does not pay, unlike Eurodolrs, returns).

In practice, the maximum current market for Stablecoins- about $ 220 billion-is transferred compared to Eurodolrs, not to mention the 6-meter American capital markets.

But the basic point is: With Trump continues to try to reshape – or destroy – the geopolitical system after the war, not only definitions and tanks are important; Financial plumbing also does. These emerging battles on CBDC and Stablecoins can “occupy the lead in this year”, as the Atlantic Council notes. Does anyone know how to hurt mbridge in Chinese?

Gillian.tett@ft.com