Given that major fiat currencies such as the US dollar, Chinese yuan, and British pound have worked reasonably faithfully for decades, why has the world suddenly gone multicoin mad? One reason is a sort of international FOMO, in which countries fearful of missing out clamor to keep up with the Chinas and Singapores of the world.
No one knows yet if digital currencies will take off. But no one wants to risk being left behind.
But there’s also another reason why global leaders seem unable to settle upon a single, universal digital currency – protectionism. The internet might be borderless, but the real world is still punctuated by physical borders, where one set of laws ends and another begins. Getting multilateral cooperation on the issuance, regulation, monitoring, and enforcement of a global currency is still a stretch too far.
The Chinese don’t want to use Facebook’s Libra coin (and nor do the US for that matter). US companies don’t want to use China’s sovereign digital currency. And no one outside the Bahamas wants to use the country’s forthcoming CBDC.
The same geopolitical events and sanctions that prevent Iranian businesses from using the SWIFT monetary system or American businesses from trading with Venezuelans apply to digital currencies. In fact, Venezuela’s desire to circumvent US sanctions was one of its primary reasons for creating its own oil-backed digital currency, the Petro. cryptoslate.com