The Banque de France announced another milestone in the creation of what could become a replacement for the dollar. In a May 20 press release, the central bank announced the successful test of a blockchain-based transaction with a central bank digital currency.

Digital currencies, such as bitcoin and Facebook’s libra, when backed by taxpayers’ money and gold could even challenge the United States’ dollar.

In the test with Banque de France, Société Générale, one of France’s biggest investment banks, issued €40 million (us$44.3 million) of covered bonds as security tokens. The bonds were then directly registered on a public blockchain and settled as digital euros. The blockchain is the digital list that provides the necessary security for the transaction. Every transaction is called a block. The blockchain creates a list of transactions that cannot easily be edited. This way, no one can spend the same unit of digital currency twice. Most digital currencies depend on this technology.

Banque de France is conducting a series of tests pioneering the use of a digital euro. Initially, the project only tests trading between banks. “This experimentation was performed end to end using blockchain infrastructures. … It demonstrates the feasibility of financial securities being digitally settled and delivered in Central Bank Digital Currency (cbdc) for interbank settlements,” explained Société Générale.

“The results of these experiments will be an important element of the Banque de France’s contribution to the more global reflection led by the eurosystem on the interest of [a cbdc],” said the Banque de France.

In the next few weeks, France’s central bank plans to conduct more tests with other parties. Eventually, these tests will include financial institutions and companies. Thus far, the bank has revealed little about the projects. “The fact that the Banque de France still keeps information covered is due to the importance and scope of the digital euro,” btc-echo explained. “The currency is a prestige project with a foreign-policy signal effect—the bank cannot afford to fail on the international stage. For this reason, parts of the roadmap are only published step by step. Despite the project’s appeal, the bank emphasizes the current sandbox status of the digital central bank currency.”

While the technology has yet to prove its practicality, Europe and Asia are pushing for its implementation. Germany’s Deutsche Bank report noted in January that digital currencies have the “potential to radically change payments, banking, central banking and the balance of economic power.”

China has already made significant progress in developing a cbdc. The digital renminbi is already in circulation with selected government officials in the Xiangcheng region in Suzhou. A cbdc could enhance automation, shorten payment processes, and strengthen security.

Transactions often take days as they traverse through various middle men and depend on human beings to ensure their security. A digital currency based on blockchain can provide the same security and thus speed up the process significantly by replacing the human factor with computers, automating it.

Digital currencies could drastically accelerate transactions if technology can provide the needed security. They would also end the war against money laundering, as paper money would become redundant. Once the technology develops far enough, international transactions could be conducted in mere seconds.

The Reserve Currency War

At the same time digital currencies are rising in popularity, the U.S. dollar’s reserve currency status is becoming increasingly unpredictable. Mark Carney, governor of the Bank of England, suggested on August 23 that the dollar’s dominance is no longer sustainable to cope with global developments but would in effect prevent developing countries’ prosperity. He suggested that new technologies could provide the solution, saying:

In the longer term, we need to change the game. There should be no illusions that the [International Monetary Fund] can be reformed overnight or that market forces are likely to force a rapid switch of reserve assets. But equally blithe acceptance of the status quo is misguided. Risks are building, and they are structural. As Rudi Dornbusch warned, “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”

When change comes, it shouldn’t be to swap one currency hegemon for another. Any unipolar system is unsuited to a multi-polar world. We would do well to think through every opportunity, including those presented by new technologies, to create a more balanced and effective system.

The U.S. National Intelligence Council projected in its “Global Trends 2025: A Transformed World” the following: “Despite recent inflows into dollar assets and the appreciation of the dollar, the dollar could lose its status as an unparalleled global reserve currency by 2025 and become a first among equals in a market basket of currencies.”

In theory, an Asian or European currency could serve as an additional reserve currency.

But so far, no other currency enjoys the same prestige and trust as the U.S. dollar. The dollar, however, has its limitations and weaknesses. These are especially visible during times of global crisis. Ledger Insights explained in “COVID-19 Highlights Problems of Dollar Dominance. Would A Digital Currency Basket Help?”:

In good times, if large parts of the world denominate transactions in dollars, it’s extremely convenient. But in a crisis, this over-reliance can be a problem because there may not be enough dollars to go around. Although central banks can help with liquidity in their local currencies, in some jurisdictions, it’s a bigger challenge to help businesses with dollars, as highlighted by two Credit Suisse research reports.

The high demand for U.S. dollars may strengthen the reserve currency, but it also gives rise to those who seek to challenge its dominance.

The recent covid-19 crisis has made it all the more likely that the dollar will lose its “unparalleled global reserve currency” status, as suggested by the U.S. National Intelligence Council. For example, the recent crisis rekindled the debate about reviving the International Monetary Fund’s (imf) project of using Special Drawing Rights (sdr). Over 50 years ago, sdrs were created as “the principal reserve asset in the international monetary system,” according to the imf’s Articles of Agreement.

sdrs can act as an international monetary reserve currency, and the imf can act as the world’s central bank. The imf can issue sdrs, and members can exchange them into their local currency.

In times of crisis, central banks print money. The imf can also do this in the form of giving out sdrs. Backed by the shareholders of the imf, all members were given the right to hold sdrs in their account. During a time of financial difficulties, sdrs could be exchanged for the needed currency.

The sdr’s problem is that it is not an actual currency and only backed by the currencies of each member state. Many doubt its ability to develop into a global reserve currency.

“But the sdr has turned out to be one of the most underutilized instruments of international cooperation,” wrote José Antonio Ocampo, Colombia’s former minister of finance and public credit and director of the Economic and Political Development Concentration in the School of International and Public Affairs. Along with the former governor of the People’s Bank of China, Zhou Xiaochuan, Ocampo has been one of the chief proponents to further the use of sdrs for quite some time.

The Chinese renminbi was added to the imf’s sdr basket in 2016. In 2019, former imf Managing Director Christine Lagarde proposed the idea of launching a digital version of the sdr.

The recent financial despair has increased the demand to use sdrs. “Many prominent people have advocated that the imf undertake an ‘sdr allocation’ to assist countries in dealing with the global financial crisis brought about by the covid-19 pandemic,” the Center for Global Development remarked.

In the middle of May, U.S. Sen. Bernie Sanders and Congresswoman Ilhan Omar sent a letter signed by hundreds of lawmakers from 40 countries to the heads of the imf and the World Bank, urging them to increase their financial assistance to help developing countries. They demanded that some of the help should come in the form of sdrs.

“To most experts, the idea seems like a no-brainer, but some imf shareholders have voiced concerns, particularly the United States, which has a controlling vote in the matter,” cgd added.

But using sdrs still requires the approval of 85 percent of the total votes held by imf members. The U.S. holds 16.5 percent of the votes and its opposition prevents sdrs from taking on a prominent role.

sdrs are issued in proportion to their shares at the imf. Struggling economies could use them as a debt relief. But economically strong countries, like the U.S., would not benefit from them. The U.S. central bank, for example, can print dollars and thus has no need for sdrs. Other countries can’t do that without fearing that their local currency would lose its value. Thus if the imf could issue large sums of sdrs, they could be used to relieve countries with high dollar debt.

The greater the financial crisis becomes, the more debt nations accumulate, and the louder the cries become to relieve debt from U.S. dollars and create additional reserve currencies.

sdrs in their current form may never rise to become a global reserve currency, but people’s demand to use them is noteworthy and their underlining principle may have a future.

Growing Crisis and Hostilities

The European Union and various Asian nations have long evaluated the options for creating a financial market independent of the U.S. dollar. Technological advances and increased financial challenges in the recent coronavirus crisis may give these attempts new life.

When various Asian nations increase their trade with each other while decoupling from the U.S., they have little interest in conducting trade in the dollar. The same is true for European nations.

But the problem is that no other currency has proved as trustworthy as the dollar. Though the euro has the backing of economically strong nations, such as Germany, it also has the risk of collapsing if the European project of a closer union fails.

But a digital euro that is only adopted by core European nations could change this dramatically. First, the central banks of the European nations would use the digital currency for bank-to-bank transactions. It could then spread to businesses, citizens and, eventually, the international market. Such a currency would not only have the backing of economically strong nations and gold but also the promise of innovation.

This promise of innovation is of particular importance when it comes to trade alliances. Let’s say China and Germany decide on a trade agreement. Usually, they would use the dollar to conduct their business. But if they were to use a digital currency that they both trusted, this trade alliance would not only be secure but many redundant processes, middle men and days of wasted time waiting for transactions would be eliminated.

Once the innovation reaches local businesses, the ease of international monetary transfers encourages more global interaction.

The success of the project would require nations to trust the new currency. The willingness to do so would increase significantly if the alternative is to use the dollar at a time when animosity toward the U.S. is at a peak.

Having the global reserve currency has not only sustained the U.S. economy, it has also empowered the nation to act globally on an unmatched level. In recent years, China, Iran, Turkey, North Korea and others have watched their stocks plummet as the U.S. imposed sanctions or simply threatened to do so.

Take the reserve currency status away from the U.S., or add an additional reserve currency, and the U.S. loses that power and the interest on its debt skyrockets and becomes unsustainable.

As of now, the dollar is in high demand globally; as long as that is the case, the U.S. can print money with full assurance that its demand is covered. But once this demand ends, the value of the U.S. dollar will plummet. People will no longer seek to borrow U.S. dollars, and the U.S. will be pressured to pay back its debt.

U.S. power is sustained as long as enough nations accept its supremacy or until they find a replacement. Even various Asian nations, at the moment, don’t trust China enough for it to establish an additional reserve currency. But over time this could change, especially as hostilities toward the U.S. increase.

The recent crisis has also shown that hostilities toward the U.S. are not only growing in Asia but also in Europe. In a survey conducted by the Kantar Public polling institute on behalf of the Körber Foundation, 73 percent said they have a worse opinion of the U.S. today than before the coronavirus crisis. Only 5 percent claim that their image of the U.S. has improved. This is a significant and dramatic shift.

If Asia and Europe act together, they could decouple from U.S. supremacy. They could create a reserve currency no longer backed by the U.S., but rather by their respective taxpayers and their agreement to trade with each other.

During the Cold War, such a scenario was deemed unthinkable, but global challenges and increased hostilities make this scenario all the more likely today.

The Bible prophesies of an end-time trade alliance between Europe and Asia. Isaiah 23 foretells of a “mart of nations” that includes Chittim (China), Tarshish (Japan) and Tyre (German-led Europe). Together, Asia and Europe have the potential to dominate world trade. In “America Is Being Besieged Economically,” Trumpet editor in chief Gerald Flurry explained that this trade alliance would also include Latin America but exclude the U.S.

Such an alliance would have no interest trading in dollars. But a digital euro as a new or an additional reserve currency could empower this alliance.

This would require European nations to unite in a powerful way.

The late Herbert W. Armstrong wrote in 1984 that a massive banking crisis in America “could suddenly result in triggering European nations to unite as a new world power, larger than either the Soviet Union or the U.S.” (co-worker letter, July 22, 1984).

This renewed unification of core European nations could also bring along a new, and perhaps digital, currency.

As the 2008 financial crisis showed, a banking crisis could easily cause the U.S. dollar to collapse. America’s enemies are also aware of this.

Could it be that those who seek to overthrow the dollar would purposely provoke a financial crisis?

The U.S. government currently believes that the covid-19 virus could have emerged from a Chinese laboratory. It has also been proved that the World Health Organization, whose information caused so many nations to go into a lockdown, has been largely influenced by China.

We have not yet seen the end of the push for new reserve currencies. Neither have we seen the end of hostilities toward America. We can’t dismiss the possibility of a coming trade war. The recent crisis has shown that all these scenarios are becoming increasingly more likely. What’s more, all of these trends are prophesied in the Bible.

It’s important for you to understand these prophecies and to watch, day by day, how they are being fulfilled. For a detailed study of these prophecies, as well as the underlying hope that comes with them, I encourage you to read “How the Global Financial Crisis Will Produce Europe’s Ten Kings” and request a free copy of Isaiah’s End-Time Vision, by Gerald Flurry.