It’s all a part of Pozsar’s “Bretton Woods III” imaginative and prescient, the place the greenback finally loses its hegemonic standing over the subsequent decade. Importantly, he sees a special consequence from that of the British pound’s lack of reserve standing within the early twentieth century, when the U.S. greenback merely supplanted it. As a substitute, he predicts a multi-currency world the place nobody forex is dominant, a consequence made doable due to CBDC clearing mechanisms, which negate the necessity for reserve forex intermediation. Negotiating counterparts might want to agree on which of their two currencies to denominate their commerce deal in, however they gained’t need to default to the greenback, or another common customary, for precise settlement.
