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The Treasury Deputy Secretary believes that the use of digital currencies in whatever format cannot prevent the effectiveness of US sanctions on countries like Russia.
Adewale “Wally” Adeyemo, the Deputy Treasury Secretary of the United States Treasury Department is optimistic that the growing popularity of digital currencies will not limit the dominance or economic powers of the Dollar. Per a CNBC report, Wally Adeyemo shared this opinion with Hadley Gamble on Tuesday in Abu Dhabi, the United Arab Emirates, adding that while privately issued digital assets may be innovative, they are potentially harmful to financial stability.
The Treasury boss bemoaned the potentials of privately issued digital currencies to be used for illicit financial transactions. However, he noted that close collaboration amongst countries can help prevent the likelihood of being used for these unsanctioned transactions.
“We know that digital assets have the ability to be used by those who want to illicitly move money through the system in a way that doesn’t touch the dollar and that we can’t see as easily. But we do think that ultimately working together with countries around the world, we can address this risk by calling on the creators of digital assets to follow the rules around anti-money laundering more closely,” he said.
Away from the growth of cryptocurrencies which despite the current massive price correction across the board is still worth $2.6 trillion, Adeyemo noted several factors are in place to help maintain the dollar’s dominance and these include the economic policies enacted on American soil.
“Ultimately the thing that is going to drive the dollar’s position in the world are the decisions we make in America about investing in our economy. The reason that people are involved in the dollar-based economy … is because they want to invest in America,” he added.
Amongst the obvious policies, the Treasury boss pinpointed is the newly signed infrastructure bill that he said is billed to help expand the American economy with its impact on other foreign economies as well.
Treasury Deputy Secretary on Sanctions Bypass
The Treasury Deputy Secretary believes that the use of digital currencies in whatever format cannot prevent the effectiveness of US sanctions on countries like Russia. The Bank of Russia is on track to launch a prototype for its Central Bank Digital Currency (CBDC) or Digital Ruble in 2022. Despite this, Wally Adeyemo believes American sanctions will always have a framework that will help it achieve its desired goals.
“We believe that even if a digital ruble or other digital currencies come into place, there will still be scope for our sanctions to have an impact on their economies simply because the global economy is still inter-connected,” he said, adding “Companies in Russia still do a great deal of business around the world. A lot of that business is done in dollars, it is done with American financial institutions and that is because the American economy remains the biggest economy in the world.”
Despite Adeyemo’s optimistic stance, several key stakeholders are advocating for the United States to step up its plans to build on its lead as a financial innovator in the world.