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Comment by lottin | Hacker News Reader

You don't say why a CBDC would be a more convenient alternative to USD for international transaction settlements. A CBDC is simply a digital version of an existing currency. It isn't nothing new, since bank deposits already allow digital transactions with any currency.

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You're missing the point. The reason the dollar is the global currency of choice is because it offers the infrastructure for any two parties to settle a transaction. The existence of CDBCs for wholesale purposes has the potential to fundamentally change that. Central banks could directly settle transactions between themselves in local currencies via dedicated corridors that bypass the dollar settlement system. That would mean more diversification of currency pairs, with increased liquidity for currency pairs that do not include USD.

> It isn't nothing new,

It is though. The infrastructure to support cross-border payments with CBDCs is bleeding edge stuff. The term floated around in obscurity for a while, but it's only been in use since 2019 or so. See: https://en.wikipedia.org/wiki/History_of_CBDCs_by_country

The USD doesn't have a technological monopoly on cross-border payments. Before the introduction of the euro, European nations were trading with each other using their local currencies just fine.

Moreover, CBDCs are ill-suited for internation trade, or for any kind of trade, because they're cash-like. They're intended as a substitute for physical cash.

The speculative currency crises in Europe during the 90s helped drive the adoption of the Euro in the first place. It's a bit outside my ken, but I do wonder if Italians of a certain age would agree that the older system worked "just fine."

I think reasonable minds can disagree about whether CBDCs are any more or less suitable than the alternatives (which seem worse to me in some respects, and certainly are worse in others) but either way, the world's central banks are singing a similar tune in unison right now. Like it or not, the macroeconomic tailwinds favor a more decentralized approach to cross-border settlements and we'll soon have infrastructure to enable this at massive scale.

Again, that's simply not true. You can't point to a single instance where CBDC infrastructure has enabled or improved wholesale international payments that were impossible or otherwise costly to do before.

Give it until the end of the year. These systems are new. Legal and logistical frameworks are being created around them. Southeast Asia will have a streamlined import/export relationship with Japan by the end of the year. Where it goes is from there is anyone's guess, but there's a lot of momentum for this to be the first of several major events over the next 2-3 years.

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