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According to the new release of ‘Outrageous Predictions’ by the banking fintech company Saxo Group, The United States dollar’s long-lived reign as the main reserve currency might soon meet its end, especially as China has started working on the creation of a new digital currency that is driven by blockchain technology.
The prediction alleges that after its long history of funding itself in the US dollar, China has been a main constituent for the staggering growth of the USD in captivation of global capital across the world.
However, as political climate intensifies and USD as a reserve currency has become an indispensable issue for China, especially as it continuously weaponizes reserve currency and uses it to further its influence and have a stronger control over the global market. To counter the growing issue, Asian Infrastructure Investment Bank will develop the Asian Drawing Right (ADR), a new virtual currency. The ratio between ADR and US dollar would be 1:2, marking ADR as the largest currency unit across the globe.
The main attraction of ADR is that it will be driven by blockchain technology and central banks in the region of Asia are fully stocked with the reserve currency that are equivalent to a mix of current gold reserves, existing non-US dollar FX reserves and trade volumes and GDP size.
Watch a video explanation of the crypto prediction here:
ADR’s characteristics also include that it is not tradeable by the general public and individual consumers, but as a reserve asset can be used to represent currencies and gold. The Chinese renminbi can be seen at a high position in the mix and the US dollar is observed being weighted below 20%.
This could be seen as China’s attempt to remove all influence of the dollar from regional trade, as local economies are on board with the idea and have unanimously agreed to conduct trade in ADR only. OPEC nations and Russian oil exporters have agreed to grow their trust in the Asian market.
The use of blockchain technology to back ADR is an attempt to ensure stability of the digital currency supply and make tracking of transactions more convenient. ADR’s reliability will be assured as export revenues received can be easily converted back to local currency of the countries through central banks and financial instruments, such as ADR-based bonds, can be stored and safely secured on blockchain database which allows room for liquidity and strengthens trust.
The US dollar will weaken by 20% against the new ADR in a matter of months and 30% against gold, as the current rate stands at $2000 per ounce in 2020.