Rapid Erosion of USD Dominance as a Reserve Currency
The US dollar’s hegemony should be measured in at least two dimensions: (i) its role as the dominant reserve currency of choice (a stock concept) by central banks and (ii) its use as the primary conduit to conduct international transactions (a flow concept), either for trade or for finance. We report, for various structurally-important reasons, that the dollar’s dominance as a reserve currency has been eroding at an accelerated pace since 2022. However, its role as an international currency will not likely be challenged any time soon, despite the heightened talks of trade settlements done in non-dollars. Investors ought not be confused by these two different concepts.
The Digital Currency Monetary Authority (DCMA) Launches an International Central Bank Digital Currency (CBDC)
Today, at the International Monetary Fund (IMF) Spring Meetings 2023, the Digital Currency Monetary Authority (DCMA) announced their official launch of an international central bank digital currency (CBDC) that strengthens the monetary sovereignty of participating central banks and complies with the recent crypto assets policy recommendations proposed by the IMF. Universal Monetary Unit (UMU), symbolized as ANSI Character, Ü, is legally a money commodity, can transact in any legal tender settlement currency, and functions like a CBDC to enforce banking regulations and to protect the financial integrity of the international banking system.
Home sales fell in March amid volatility in mortgage rates
Sales of previously owned homes declined 2.4% in March compared with February, according to a monthly report from the National Association of Realtors. At a seasonally adjusted, annualized rate, that amounts to 4.4 million units. Sales were 22% lower than March of last year. The weakness is likely due to a sharp jump in mortgage interest rates. With home prices still historically high, today’s buyers are increasingly sensitive to even daily moves in mortgage rates. The March sales were likely based on contracts signed in January and February, when rates were volatile.
Explainer: Looming US debt ceiling fight is starting to worry investors
A debt ceiling fight is looming in the U.S. yet again, giving investors another worry for markets this year. The U.S. government's deadline to raise the $31.4 trillion debt ceiling could be sooner than expected, analysts have said, pulling forward the risk of a debt default that could have wide repercussions across global financial markets. Recurring legislative standoffs over the debt limits this last decade have largely been resolved before they could ripple out into markets. That has not always been the case, however: A protracted standoff in 2011 prompted Standard & Poor's to downgrade the U.S. credit rating for the first time, sending financial markets reeling.
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