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. 

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

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.

If left unchecked, Beijing’s aggressive use of its “rules” threatens to turn Western firms into the Communist Party’s enforcers.

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. 

Should INSTEX itself be sanctioned, it would be a powerful signal to the rest of the world. In this scenario, critical dollar-denominated trade not currently facing sanctions, but at potential risk of being sanctioned in the future, could migrate to third party currencies, transferred through sanctions-resistant entities to an INSTEX-like body.

Michael Greenwald writes that with the recent change of leadership at the European Central Bank, the euro likely has a bright future ahead.

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.