It is a critical first step that the financial policymakers of the United States have acknowledged the need for a CBDC, but that realization is not enough. 

U.S. complacency regarding the dollar global reserve currency status could be the ultimate Achilles Heel for the United States in the years ahead. 

Because the Libra now seems viable, the question becomes whether there is a need to integrate a digital currency into the global economy.

When wielded effectively, U.S. sanctions have weakened targets like Iran and North Korea without impacting the global economy. But against authoritarian heavyweights like Russia and China, this may no longer be the case. America’s policy options are narrowing.

While New York, London, and Hong Kong will continue to play outsized roles in international business, their current privileged status may be more precarious than it seems.

In the long run, despite more advanced payments technology, it will be incumbent that China pursue further liberalization to render its currency more attractive.

If a symbolic denouncement is indeed the goal, Magnitsky sanctions are likely the right tool, as they would send a powerful message of solidarity with protesters to both the Hong Kong and mainland authorities. 

America’s sanctions strategy is increasingly burdened by the involvement of systemically important financial institutions and sovereign investors in global financial statecraft. In the post-9/11 world, Washington’s strategy was highly effective in pursuing non-state actors like al-Qaeda or ISIS, as well as small, rogue nations like Iran. Yet in addressing larger sovereigns like the Kremlin, US strategy has struggled to maintain the same effectiveness given the cross-border financial connections linking these entities to Western markets. As an era of great power competition among Washington, Moscow, and Beijing sets in, these foes will crowd out smaller, non-state actors, thus demanding an adequate response from the Treasury.