WEF 2025: "The dollar should represent stability, not serve as a tool for threats."

At the World Economic Forum in 2025, participants discussed the future of the US dollar amid financial fragmentation, increasing debt burdens, and the rise of digital currencies.

This was addressed at WEF 2025 in Davos.

Innovations in Financial Systems and Cryptocurrency

Professor Kenneth Rogoff from Harvard University emphasized that digital innovations are already transforming the global financial ecosystem: “Historically, we have transitioned from promissory notes and checks to debit and credit cards. Today, we stand on the brink of a new era where digital currencies could challenge traditional banking systems. However, this is a lengthy process, and the outcomes depend on many factors.”

Raghuram Rajan, a professor at the University of Chicago, highlighted the role of cryptocurrencies in countries with unstable economies:
“Cryptocurrency is predominantly used where citizens do not trust the national currency. However, its application in everyday transactions remains limited. India, for instance, is actively developing direct banking payments, while the US is just starting to implement similar programs like FedNow.”

Diversification of Currencies and Geopolitical Implications

Markus Diem, a journalist from Switzerland, pointed out the threats from Donald Trump to countries seeking to diversify their reserves away from the dollar.

“Threats do not contribute to stability. On the contrary, they push countries to seek alternatives such as the euro or the yuan. This poses a challenge for the US, as maintaining trust in the dollar is a key element of its global role,” noted Rogoff.

Professor Jean Kayou from the Hong Kong University of Science and Technology added that China aims for yuan stability, avoiding currency and trade wars: “China demonstrates a measured response to tariff conflicts, as exchange rate stability is critically important for the internationalization of the yuan.”

The Future of Interest Rates and Their Impact on the Economy

Deepak Jain, CEO of Jubilant from India, raised the issue of US monetary policy's impact on the dollar: “I see two scenarios: the first is a gradual reduction of Fed rates after the situation normalizes, the second is an increase in tariffs, which could raise inflation and alter the dollar's trajectory.”

Kenneth Rogoff commented that rate hikes affect the exchange rate, but the responses from other countries could shift the situation: “If countries implement symmetrical tariffs, the impact on the dollar's exchange rate becomes negligible. However, the overall effect depends on the decisions made by each party.”

Perspectives on Global Economic Trends

Jean Kayou pointed out the differences in economic indicators between China and other countries:
“China is currently demonstrating deflationary trends, whereas most countries are facing inflation. This makes its strategy unique in the global context.”

Raghuram Rajan summarized that political factors also play a vital role in shaping economic expectations:
“Central banks may overlook a one-time price increase, but if it alters inflation expectations, the consequences can be significant.”

Background. Previously, Mind reported on how countries are creating the future of electric vehicles. Experts at WEF 2025 discussed key steps for accelerating the development of the electric vehicle ecosystem.