Cryptocurrency is increasingly used in the global shadow economy, undermining the dominance of the US dollar. This was stated by Kenneth Rogoff, former chief economist of the IMF, in an interview with Bloomberg.
He noted that the influence of the American currency is gradually declining, losing ground to the yuan and the euro.
“But there is also cryptocurrency, because one of the main markets for the dollar is the global underground economy. And there the government controls nothing,” the expert added.
The lion’s share of this sphere consists of tax evasion, including through the use of cash transactions. Clearly illegal operations such as arms or illicit substance trade do not constitute a significant portion. Rogoff estimated the total volume of the shadow economy at 20% of global GDP — from $20 trillion to $25 trillion.
“It’s a big market where the dollar particularly dominates,” he emphasized.
In his opinion, cryptocurrencies will continue to capture this segment of transactions, as they allow bypassing conventional financial channels and avoiding government control. For this reason, Paul Krugman, Nouriel Roubini, Jamie Dimon, and Warren Buffett, who consider digital assets merely a scam, are wrong, the economist added.
“Cryptocurrency has value. It is used for transactions. There is a large part of the economy that even with strict regulation will be difficult for the government to control. So it is not useless. Much is at stake,” Rogoff concluded.
Back in 2021, at its peak, Bitcoin, Ethereum, USDT, and USDC accounted for $2.8 trillion or 12% of international trade in goods, according to data from the BIS.