Title: Emergent Centralized Chinese Cryptocurrency Challenges Status of U.S. Dollar, Multiagency Action Required

Name: Yana Bogoev
Mentor: Jeannie Johnson

The recent launch of China’s pilot Central Bank Digital Currency (CBDC)—a result of America losing the U.S.-China digital currency race—presents significant threats to the international financial trade system and the United States’ economic stability. The international financial trade system that the U.S. heavily benefits from, faces imminent vulnerabilities because of its lack of digital infrastructure safeguards. Blockchain technologies and cryptocurrencies are on the rise and continue to grow. The current international financial trade system depends on traditional bilateral corresponding banking relationships, but as China, and counties alike, begin to implement national cryptocurrencies, the system that relies on cross-border data flow (a means of tracking funds) will dramatically change. As China marches forward in this uncharted territory, it will capitalize on the expansive network of millions of Chinese mobile payment users spreading the influence of the digital currency around the world. This event could potentially mark the beginning to the end of the U.S dollar as the most widely used currency in the world. A status and success that the United States has comfortably relied on. The rapid growth of the Chinese CBDC threatens U.S. cross-border flow tracking and indicates potential decline of the U.S. dollar, widening the security gap of traditional international trade systems of governments and their financial institutions, and the underdeveloped treaties and legislation that protect them. Without significant cooperation and collaboration from members of the Intelligence Community, surveillance of Chinese assets in reserves and the development of their own federal digital currency, the U.S. will be severely underprepared to adequately protect centralized financial networks, track the movement of funds through cross-border data flow, protect the value of the U.S. dollar and singlehandedly let down the United States economy deteriorate to the Chinese digital currency.

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