Bank of England Governor Mark Carney presented the idea of replacing the US dollar with a central bank-issued cryptocurrency such as Facebook's Libra.
Carney proposes the synthetic hegemonic currency
23. August 2019, while Carney described how Brexit uncertainties, persistent tensions in world trade and the overall weaker business are worsening the global economy.
Carney emphasized that, due to globalization and the widespread dominance of US dollar developments, has significant worldwide implications in terms of trade and economic conditions, including in countries with relatively little direct exposure to the US economy. The BOE Governor explains,
“In particular, increasing the dominant currency pricing (DCP) reduces the shock-dampening properties of flexible exchange rates and alters the balancing of inflationary output that monetary policy makers face. And most fundamentally, a destabilizing asymmetry in the heart of the IMFS is growing. While reorganizing the world economy, the US dollar remains as important as the collapse of Bretton Woods. "
He also warned that this dynamic had increased the risk of a" global liquidity trap. "
The International and Monetary System Requires Improvement
In light of the new economic environment, Carney asked to radically improve the structure of the current IMFS (international monetary and financial system). And to create a better IMFS, the council he countries to consider all opportunities, including those presented by new technologies.
As previously reported by Bitcoinist the bank manager had already expressed his openness to the idea of a central bank issued cryptocurrency.
Now, in In his speech at the Federal Reserve Symposium, Carney was more specific, presenting the idea of a synthetic hegemonic currency (SHC) provided by the public sector, "perhaps through a network of digital currencies." He stated,
"An SHC could curb the dominant influence of the US dollar on global trade. If the share of billed trading in SHC were to increase, shocks in the United States would have less severe emissions through exchange rates, and trade would be less synchronized across countries. "
To bolster his case, the CBE chief emphasized that retail transactions are increasingly occurring online through digital payments. And the high cost of both domestic and cross-border electronic payments is driving innovation. For example, Carney mentioned Facebook's Libra. And he pointed out,
"Technology has the potential to disrupt the network externalities that prevent the current global reserve currency from being suppressed."
Do you think a central bank issued synthetic Hegemonic Digital currency will topple the USD dollar? Let us know in the comments below.
Photos courtesy of Shutterstock, Bank of England, Bank of America Merrill Lynch Global Fund Manager