Treasury’s Adeyemo says dollar to remain the dominant currency

Representations of the virtual currency Bitcoin are placed on US dollar banknotes in this illustration taken on May 26, 2020.

Moin Rovich | Reuters

US Deputy Treasury Secretary Wally Ademo said the dollar will remain the world’s dominant currency despite the growing interest in cryptocurrencies.

“One of the things we do know is that digital assets present opportunity in many ways to the economy, but they potentially present challenges,” CNBC’s Hadley Gamble, Adimou told CNBC on Tuesday at the ADIPEC Energy Forum in Abu Dhabi, United Arab Emirates. .

“We know that digital assets have the potential to be used by those who want to illegally move money through the system in a way that doesn’t touch the dollar and we can’t easily see it. But we believe this ultimately works alongside countries around the world, We can address these risks by calling on digital asset originators to closely follow anti-money laundering rules.”

“Ultimately the thing that will advance the dollar’s place in the world are the decisions we make in America about investing in our economy. And the reason people participate in the dollar-based economy… is because they want to invest in America,” he continued.

Ademo said that because of policy decisions, such as the trillion-dollar infrastructure package that was signed into law on Monday, that would help “unleash the potential” of the US economy and create investment opportunities for other governments.

“As our economy grows, it is an opportunity for the global economy to grow, and with that happening, the dollar will continue to be the dominant currency in the world as well,” he said.

His view echoed comments made earlier this year by St. Louis Federal Reserve Chairman James Bullard, who dismissed bitcoin and other digital assets as a serious threat to the dollar’s standing as the world’s reserve currency.

Sanctions Policy

Russian Central Bank Governor Elvira Nabiullina said last week that it will launch a prototype of the digital ruble platform early next year, according to Reuters. Nabiullina said that Russia will undergo a beta test before making a final decision on launching the digital currency.

Speaking to CNBC in early June, Nabiullina said she expects digital currencies to play a pivotal role in the future of financial systems as the economy moves online.

Several central banks around the world are developing sovereign digital currencies, which advocates say could enhance financial inclusion and make cross-border transactions easier.

When asked if the possibility of a digital ruble could make US sanctions less effective, Adeemo replied: “We believe that even if the digital ruble or other digital currencies are implemented, there will still be room for our sanctions to affect these economies just because the global economy is still connected”.

He said, “Companies in Russia still do a great deal of business all over the world. A lot of this business is done in dollars, and it’s done with American financial institutions because the US economy is still the largest in the world.” .

“As long as that is the case, as long as we make the investments that are needed, we still have the ability to use our sanctions system to make sure that we prevent the thing that was created to prevent it, which is illicit financing through the system and also hold people who are taking steps that are not being taken to account. in our national security.”

Washington has imposed sanctions on Russia for a variety of reasons in recent years, from suspected poisoning of opposition politicians to election interference and cyber attacks.

Adeyemo’s comments add to a report in October from the Treasury that there may be some impact on US cryptocurrency sanctions. “The advent of cryptocurrencies is making it difficult for sanctions to be effective,” he reportedly told a Senate committee last month.

CNBC’s Abigail Ng contributed to this report.

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