Dancing to a New Beat: Digital Wallets, De-Dollarization and CBDC Now Call the Tune
Trump's 100% tariffs won't stop multipolarity if the US is seen as the risk to manage
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Topics:
Digital Wallets Win Again: Now Cross Border Transfers
CBDC: Time for Action with 15 Launches by 2030
The "Quiet Revolution" From Petrodollar to Digital Yuan
Multipolarity: The US is Now A Risk to Be Hedged
BIS's Project Rialto and the $800 bn Cross Border Instant Payment Market
Welcome, readers, new and old!
This week, we are focusing on the exciting world of payments—and when I say exciting, I mean it. We will dive into the complex dance of digital wallets, CBDC, and the mechanics of instant payments, as well as the “quiet revolution,” the shift to non-dollar payments.
This dance inspired me to use Degas’ artwork of dancers!
Of all the topics I cover, de-dollarization and the transition to non-dollar currencies continue to be the most controversial. I’m not making this up, as I notice people unsubscribe whenever I discuss them in a newsletter. Please don’t go!
I understand that this topic is challenging because it questions core beliefs. However, the trend toward reduced dollar usage is real and has been noted even by the IMF, which is decidedly not anti-US.
The trend toward multipolarity is now the most complex dance of all. The US once called the tune, and Trump is calling for 100% tariffs on non-compliance, but many nations are dancing to a different tune.
Finally, a brief article on how the BIS, with Asian partners, wants to make cross-border instant payments a reality. Note once more that Asia is central in digital wallet developments!
So, let’s take the plunge, to see how everything from digital wallets to CBDC will change our world.
Digital Wallets Win Again
Let’s start our journey with digital wallets, which are central to the changes coming in how we pay. Whether these digital wallets use CBDC, stablecoins, crypto, or other currencies, the reality is that people love them and aren’t going back.
The global remittance market is worth $794 billion in cross-border flows, and if consumers had their choice, they would all conduct their transactions through digital wallets.
Some 42% of consumers in this limited poll prefer digital wallets for making cross-border payments, and who can blame them?
Once people use peer-to-peer payments on digital wallets in domestic markets, they demand the same convenience across borders.
Asia again takes the lead in this area, with local wallets connected directly by central banks or private connections like Alipay+. The reality is that if Asia is driving this entire market (see the final story today on the BIS)
Read why digital wallets are going cross-border: HERE
15 CBDC Launches by 2030?
The annual OMFIF survey of central banks shows that most are making solid progress on CBDCs, even if a small group shows delays.
Again, I will say, “CBDCs are coming, like it or not.” If you’re subscribing to this newsletter, you’re already miles ahead in preparing for the CBDC revolution!
The survey shows that 75% of central bank survey respondents expect to issue CBDCs, which supports my certainty that they are coming.
Read central banks’ motivations for issuing a CBDC: HERE
The “Quiet Revolution” (1 of 2)
Next are two articles designed to be read together. The first is closely related to my book Cashless: China’s Digital Currency Revolution, in which I suggest that the digital yuan will revolutionize trade.
This new report argues that the Chinese yuan will slowly become a competitor to the dollar in oil markets. I’ve argued this for some time. One of my more recent articles, HERE, covers Saudi Arabia's joining the mBridge project.
This latest report once again shows why China’s yuan will present a long-term challenge to the dollar for the Gulf’s oil.
Read why the Yuan is likely to grow in use in this new report: HERE
Multipolarity: Hedging US Risk (2 of 2)
The Munich security conference is not something that is covered often in fintech publications, but it should be.
Everything that we are doing in fintech, from CBDC to digital wallets, revolves around a complicated geopolitical dance.
The dance was simple in the past: The dollar ruled, and the US called the tune. Now, the US is considered a “risk to be hedged,” and other nations, through CBDC and local currencies, are trying to create their own dances.
This is where CBDCs will play a big role in our future. They will allow nations to transact without touching US dollars or US infrastructure: HERE
$800 bn Cross Border Instant Payment Market
BIS's Project Rialto a Step Closer to and $800 bn Cross Border Instant Payment Market
The retail cross-border payments market is valued at over $800 billion and growing.
The BIS, Singapore's MAS, Malaysia's central bank, and the Bank of France are working hard to make instant cross-border payments, the foundation of mobile money, a reality.
Note that this is another instant payment system (IPS) project that is based in SE Asia!
The BIS is trying to solve the problem of retail cross-border transactions lagging domestic ones in terms of cost, speed, access, and transparency because of the complex processes involved.
The complexity arises from compliance, market infrastructure, foreign exchange (FX) services, and settlement assets and procedures.
Project Rialto targets FX- and settlement-related frictions in retail cross-border payments with central bank money. Crypto need not apply.
The project aims to develop a proof of concept to demonstrate the technical feasibility of retail cross-border payments using interlinked instant payment systems and an automated FX wholesale conversion layer that allows the use of central bank money (CeBM) as a safe settlement asset.
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Hot Topics for Subscribers only
What you’re missing in the subscriber-only section below:
FT: The Future of AI 2.0
AI in Emerging Markets
Exploring the Future of AI Tech
Investment Perspectives on Tokenization
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Dear paying subscribers,
Thanks for subscribing, and I hope you enjoy this week’s curated collection.
Feel free to reach out if you’re interested in something specific or have any comments:
🔹The FT combined a series of articles into its Future of AI series. It’s a solid read and I recommend the article on page 9 “Why it is too soon to call the hype on AI’s productivity promise”
🔹 AI for everyone else? AI in emerging markets just got a big boost with the launch of DeepSeek a few weeks back. Even India, in a surprise move, embraced China’s DeepSeek as it provides a low-cost and energy-use solution.
The reality is that AI will not be evenly distributed, giving emerging market nations another new area to try to catch up.
🔹 The Copenhagen Institue asks BIG questions: “How do you navigate a world where technological advancements accelerate faster than ever? Where AI plays an increasingly important role. What do you need to know and be aware of? How can you prepare for a world of constant change while remaining relevant in the future?
The answer is in the framework they propose. It’s a great read and I’ll likely write about it next week.
🔹 The CFA Institute with a great read on tokenization but from a decidedly different perspective. This covers tokenization from an investment management perspective rather than the technical “how to” perspective I normally cover.
🔹 The chart of the day from Statista is directly tied to our discussion on multipolarity and de-dollarization. Statista: HERE
