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An exercise at Kennedy School explores the dangers if large sums could be secretly sent to hostile nations

By Clea Simon

The year is 2021, and the nation is in crisis. North Korea has just tested a missile that will soon be capable of delivering a nuclear warhead to the continental U.S. The move took Washington by surprise as the project was likely funded via a new Chinese digital currency, which allowed North Korea to bypass the global banking system. In response, the National Security Council House has gathered in the White House Situation Room to formulate short- and long-term responses.

“Digital Currency Wars: A National Security Crisis Simulation” unfolded before a packed audience in Kennedy School Forum on Tuesday night. Hosted by the Economic Diplomacy Initiative and co-sponsored by the Belfer Center for Science and International Affairs, the exercise brought together administration veterans, career diplomats, and academics to dramatize a very real prospect — the rise of an encrypted digital currency that would upend the U.S. dollar’s dominance and effectively render ineffective economic sanctions, like those currently applied to North Korea.

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