Larry Fink says Bitcoin could replace the dollar as the world’s reserve currency because of national debt
From Yahoo Finance: 2025-04-01 10:34:00
BlackRock CEO Larry Fink warns that mounting U.S. national debt could jeopardize the dollar’s status as the world’s reserve currency, potentially paving the way for decentralized assets like Bitcoin to take over. Fink and Ray Dalio caution that if debt isn’t managed, global confidence in U.S. Treasuries may crumble, leading to economic instability. With America’s national debt surpassing $36.2 trillion, Fink raises concerns that it could lead to the dollar losing its status as the world’s reserve currency. He suggests that decentralized currencies like Bitcoin could step in as an alternative if worldwide organizations lose faith in national currencies and seek independent solutions. Fink explains in a letter to shareholders that the U.S. has benefited from the dollar’s status for decades, but it’s not guaranteed to last forever. Since 1989, the national debt has grown three times faster than GDP, with interest payments set to exceed $952 billion this year, surpassing defense spending. By 2030, mandatory government spending and debt service will consume all federal revenue, leading to a permanent deficit. Fink emphasizes that if the U.S. fails to control its debt and deficits continue to rise, there’s a risk of losing its position to digital assets like Bitcoin. The advantages the U.S. enjoys from the dollar’s dominance in global markets allow for bullish policies from the White House. These benefits include the ability to navigate foreign exchange fluctuations and access lower borrowing costs. Many foreign central banks hold dollar-dominated assets to manage economic shocks and stabilize their currency values. The majority of these assets are U.S. Treasuries, which make up around 59% of foreign reserves worldwide. However, these benefits come with a caveat: Foreign governments and central banks must trust the currency’s creditworthiness. If purchasers of U.S. Treasuries doubt that the debt will be repaid by the American government, they may stop buying them. Instead, they could turn to digital assets that are not influenced by the White House, potentially lowering the dollar’s value and diminishing U.S. economic power. BlackRock CEO Larry Fink acknowledges the benefits of digital assets while cautioning that they could undermine America’s economic advantage if investors view Bitcoin as a safer bet than the dollar. Fink isn’t alone in his concerns about the consequences of America running out of buyers for its growing debt. Bridgewater founder Ray Dalio recently warned about the national debt crisis, stating that it’s approaching rapidly. Speaking at Converge Live in Singapore, Dalio highlighted the severe supply and demand imbalance in the economy, stressing the importance of understanding the mechanics of debt. He pointed to history as a guide for assessing potential outcomes, suggesting that countries may resort to debt restructurings, exerting pressure on others to purchase their debt, or even cutting payments to certain nations for political reasons. Dalio emphasized the need to learn from past situations to navigate the challenges ahead. He urged economists to look beyond their current reality and consider historical patterns to anticipate future developments. The article was originally published on Fortune.com.