Former International Monetary Fund (IMF) chief economist Kenneth Rogoff believes that cryptocurrency is eroding the US dollar’s dominance and poses a significant threat to its global standing. According to Rogoff, the growing use of crypto in tax evasion and bypassing sanctions is one of the key factors contributing to this decline.
The underground economy, also known as the gray market or shadow economy, accounts for about 20% of the world economy, worth around $20-$25 trillion. Traditionally, this economy relied heavily on US dollar notes for transactions, but crypto is increasingly becoming the preferred mode of payment.
Rogoff argues that while crypto has not yet made significant inroads into the legal economy, its use in the underground economy is a concern for authorities. The decline of the US dollar’s dominance affects global interest rates, making everything more expensive. Additionally, the loss of the dollar’s market share makes it harder for US authorities to track financial flows and gather information about potential national security threats.
Rogoff believes that critics who dismiss crypto as having no value are incorrect. He states that cryptocurrencies provide an accepted medium of exchange, which is a fundamental value proposition. Even if governments heavily regulate crypto, they will still face significant challenges controlling the underground economy.
According to Rogoff, crypto has “value,” but it can’t replace the US dollar in the legal economy where governments have more leverage. However, in the underground economy, crypto’s use is a concern due to its limited ability to be tracked by authorities.
Source: https://cryptoslate.com/former-imf-chief-economist-believes-crypto-is-a-rising-threat-to-the-u-s-dollars-dominance