This report explains that the digital currency arms race is well and truly underway between major countries. Libra has galvanized governments to both learn more about the technology and the potential of stablecoins. The illusory US debt ceiling will again be readjusted upwards in 2020 and it will only be a matter of how fast it reaches the next threshold. The sovereign debt bubble and abnormal events in the money markets will most likely persist in 2020 and we could see digital currency becoming even more of a priority among central banks if ineffective monetary policy cedes to fiscal policy.
With Libra, Facebook is not reinventing the wheel nor creating any new asset class but rather creating a complementary currency. It’s not an endeavor that hasn’t been done before, the only difference is the company behind it and the scale. In our view, it is quite likely that Libra will eventually get off the ground but in a much more diluted form that requires closer integration with and oversight from governments. We expect the next phase of globalization to be defined by the trends outlined in this report series, in particular, unconventional monetary policies and corporations ascending national borders as directors of globalization and governance as nations lack the cooperation and flexibility to adapt to ever more disruptive change.