Global | Stablecoins: echoes of the past

Summary

Donald Trump claims to want a "competitive" dollar (i.e., weaker), while insisting on preserving its strength and international hegemony. Added to this is his disregard for monetary independence, which causes mistrust, plus his embrace of stablecoins, which compete with the eurodollar market.

Key points

• Key points:
• To understand the assumptions that could lend coherence to this set of positions, it is useful to look at the Nixon administration, a frequent reference point in the "make America great again" approach.
• Back then, there was a growing fiscal deficit being cushioned by a loose monetary policy. Initially, excess demand and inflationary pressures were partially exported thanks to the global fixed exchange rate system; other countries had to defend parity with the dollar without allowing their inflation to skyrocket.
• Rather than devaluing, the objective was the negotiated and selective revaluation of other currencies, within a framework in which the United States set the terms due to its geopolitical and economic primacy.
• Today, Europe, facing similar obstacles, is moving forward with new challenges: deepening its capital market, consolidating common debt and formulating a commitment to provide global liquidity.
• In contrast to Trump's hegemonic vision, a multipolar scenario is emerging (with the euro and the yuan as counterweights), as well as room, if prudence prevails, for genuine cooperation.

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