Paul Brody is Global Blockchain Leader for EY (Ernst & Young). Under his leadership, EY is established a global presence in the blockchain space with a particular focus on public blockchains, assurance, and business application development in the Ethereum ecosystem.
The dominance of the U.S. dollar is hard to overstate at the moment. It’s not just that the U.S. economy is on a roll. The U.S. dollar is the preferred choice for international business transactions at a level that’s even larger than the U.S. economic position.
The Bank of International Settlements estimates that the U.S. dollar is used in 90% of all international payments and settlements, with 40% of all trade invoiced in U.S. dollars. In the world of blockchain stablecoins, the U.S. dollar represents 99% of all global stablecoin transactions. This dollar dominance gives the U.S. considerable power in the global markets, especially when it comes to sanctions against individuals and governments. Banks, wary of being cut off from 90% of all global payments, are going to follow U.S. directives whether they are binding or not.
Algorithmic stablecoins aren’t perfect and they aren’t risk free. Because they are dollar-denominated but often don’t consist of dollars, they can “lose their peg” with the U.S. dollar. Sometimes this happens because of fraud, but it can also happen when the underlying assets change rapidly in value. In periods of high market turmoil and uncertainty, this happens.
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