How will digital technologies influence the international monetary system?

The article examines the impact of new financial technologies—including cryptocurrencies and central bank digital currencies (CBDCs)—on the international monetary system, cross-border payments, and global capital flows. While these innovations are expected to make international payments faster and cheaper and increase competition among fiat and private currencies such as stablecoins, they are unlikely to fundamentally alter the dominance of major reserve currencies like the US dollar, which is supported by strong institutional foundations and market trust. Emerging market economies may face heightened volatility in capital flows and exchange rates due to easier cross-border financial movements, posing policy challenges. Although China’s digital renminbi (eCNY) may enhance its use in international payments, it is not expected to challenge the dollar’s status as the primary global reserve currency. Overall, technological advances will reshape financial market operations and payment systems but will not trigger a revolutionary shift in the international monetary order in the near future.