Money, Sanctions, and the Future of Global Finance

A new challenge to the state-anchored international monetary system emerged with the invention of Bitcoin, introduced in 2008 through a paper published under the pseudonym Satoshi Nakamoto and launched as a functioning network in January 2009, the first cryptocurrency to combine cryptographic security with a decentralized, blockchain-based ledger maintained without any central bank or government issuer. Bitcoin and the thousands of other cryptocurrencies that have followed have been promoted by advocates as an alternative store of value and payment mechanism outside government control, while critics, including many central bankers, point to their price volatility, their use in illicit finance, and their limited adoption for everyday transactions as evidence they remain far from a genuine substitute for sovereign money. Partly in response to this challenge, and to the broader shift toward digital payments, a large majority of the world’s central banks have since begun researching or piloting central bank digital currencies, or CBDCs, state-issued digital money intended to combine the convenience of digital payment with the stability of a sovereign currency. China’s central bank has moved furthest among major economies, piloting its digital yuan, known as the e-CNY, in numerous cities since 2020, while the European Central Bank and others continue to study a possible digital euro.