In 20 years, there should be five or six dominant currencies in the world, according to the forecast made by the Economy Minister Paulo Guedes during a panel in the World Economic Forum on Thursday (1/23). And he cited the effort central banks are making to incorporate technologies such as the blockchain into their national currencies to maintain the role of public money issuer.
There are several components in this equation. “You have several pressures. There is the geopolitical pressure, with China and Europe refusing the dominance of the dollar in their areas of influence. There is also the economic issue itself, as all these regions will have to trade with each other – in this sense the renminbi should emerge as a currency as strong as the euro – and finally there is the technological pressure, with supranational currencies such as the Libra.”
He pointed out that this game is about confidence. “People use the currency they trust. Central banks are scared of a currency like the Libra, so they started to evaluate the blockchain. With the blockchain and the trust they can provide, the five or six blocks will be able to maintain the role of money issuer”, he added.
The five or six dominant currencies will be used regionally. For example, the euro in Europe’s region of influence and the renmimbi in Asia. The dollar should be restricted to other areas of greater influence of the United States, such as Latin America.
The minister also mentioned the economist Friedrich Hayek, considered one of the greatest representatives of the Austrian School of Economic Thought, who dreamed with a supranational currency. “Until recently you had the gold standard, but that was not functional. Today the young people, with these new technologies, are making this possible”, he said.