Mike Novogratz, a billionaire businessman, believes that the United States would be at a strategic disadvantage if it does not develop a digital currency quickly.
He clarified that such a change will be especially necessary now that China has launched the first shot in the digital currency war.
Digital Dollar Needed to Take on Digital Yuan
“To me, it’s an existential crisis; we need a digital dollar,” said Novogratz, CEO of Galaxy Digital.
The digital yuan has long been seen as a way for China to contend not just with the United States but also with other large developing economies.
China’s central bank controls the virtual yuan that is currently being minted and will release the latest electronic currency.
China’s digital yuan, which is regulated by the central bank of China, could pose a challenge to the US dollar, which is the world’s reserve currency and the benchmark for intentional exchange.
The central bank digital currency (CBDC) has the potential to be used for foreign trading, but it is unlikely to be connected to the global financial system.
Dollars are used to market essential materials including oil and copper. According to the Bank for International Settlements, the dollar currently accounts for about 88 percent of all international foreign exchange transactions, equivalent to about 4% for the yuan.
China’s Digital Yuan
China’s current digital currency resembles the country’s paper currency. Users will invest it like cash thanks to a cell phone service created for the People’s Bank of China.
It is currently being evaluated by 100,000 participants, although it is unclear when it will be accessible to China’s 1.4 billion people.
It has the ability to offer China’s central bankers enormous stability, trace offenders, and make it simpler for low-income citizens to move and save capital without needing to give banks a break.
The ability of a digital yuan to crack Washington’s stranglehold over the international banking sector is one of the key reasons for US worry.
Sanctions against countries like Iran can reportedly be enforced by attempting to lock foreign companies out of the financial sector if they refuse to comply with the sanctions.
Who is Mike Novogratz?
Mike Novogratz is a former hedge fund investor who worked with Fortress Investment Group. He is currently the CEO of Galaxy Digital, which focuses on cryptocurrency technology investments such as Bitcoin and Ethereum.
He was a billionaire until the financial crisis of 2007-2008, according to Forbes, and then regained his fortune after investing in cryptocurrencies.