It is reported that Bank of America (Bank of America) warned customers that the monetary policy of President Donald Trump could provoke currency war.
Trump is trying to stimulate the US economy and business investment. One of the ways to achieve the goal is to make the dollar more competitive with other currencies.
Currently, a strong, overvalued dollar can lead to depressed foreign trade, slow investment and lower US manufacturing activity. It also makes consumer goods more expensive than offers from other countries.
For example, the Economist’s Burger Index now shows that Big Mac is 19% cheaper if it is bought in the euro zone for euros, than when bought in the USA for dollars.
“The administration has several ways to weaken the dollar. It would be possible to abandon the policy of a strong dollar that has existed for more than two decades. Or, Trump can order the treasury to sell dollars in an attempt to lower their value. This kind of interference has not occurred since 1995, ”reports CNN.
To weaken the US dollar, Trump will need support from the Federal Reserve System.
As a world reserve currency, the US dollar is in constant demand, but, unlike in 1995, it is now competing with Bitcoin, which position itself as a more efficient reserve currency.
BTC proponents claim that it is based on math and fixed emissions, is highly portable, and can be sent via the Internet like email.
Last week, US Federal Reserve Chairman Jerome Powell noted that Bitcoin, like gold, is a speculative means of saving value.
Speaking to the Senate Banking Committee, he acknowledged that Bitcoin illustrates how innovative technology can transform global finance, even if people do not use it for daily transactions.
Because US monetary policy points to a weaker US dollar, a steady and growing bitcoin may become a more attractive hedging tool.
According to the Coinhills, the dominance of the dollar in bitcoins is growing. This is the most traded national currency paired with BTC, representing 72.2% of the market in the last 24 hours. The Japanese yen is the second most traded national currency with Bitcoin from 19.23%. However, in December 2018, the yen surpassed the dollar in Fiat-Bitcoin transactions, capturing 48.34% of the market compared to 43.77% of the US dollar.
After the US dollar and the Japanese yen, all other currencies combined represent 8.56% of the 24-hour bitcoin volume. Completing the Top 10, the Korean Won is leading among other fiat currencies that are traded for bitcoins.