In a recent revelation and just before the governor of the Bank of England, Mark Carney, steps down, he shares with us his vision of the future of the global economy, and apparently, the US dollar is not in it.
The current international monetary curve is not beneficial neither for individuals and businesses, nor governments and financial institutions themselves. Carney cites that all the uncertainty that comes packed with the ongoing trade wars, currency wars and all that politically influenced monetary policies could be, and will be eliminated with an internationally accepted digital currency, brining Facebook’s Libra as an example.
During a meeting with the policy-making cream top, at the U.S. Federal Reserve’s annual symposium in Jackson Hole, Wyoming, Carney said that banks might pretend that everything is alright from a short-term perspective, but eventually, dramatic changes in the running global economic system will be required.
Yet, the most interesting part of his speech was the fact that once again, we see traditional banking institutions having a change-of-heart when it comes to cryptocurrencies, with Carney saying that dollar’s position as the world’s reserve currency must end, embracing a digital currency as a solution.
Additionally, he said that a decentralized approach in the global economy could allow other national currencies such as China’s yuan, to replace the U.S. Dollar as the world’s standard exchange medium.
While it is true that most financial watchdogs and regulators are against Facebook’s Libra, especially concerned about its policy, Carney suggests that what he calls a “Synthetic Hegemonic Currency” is the answer for long-term economic stability, and it should be run by the public sector, through the central banks’ services network.
Furthermore, Carney’s team explains that trusting the U.S. Dollar sets us in an extremely volatile position that could be hit by another financial crisis in no-time if the Dollar decided so.
Hence, creating and utilizing a more transparent and decentralized digital currency would help us avoid being infected by any other currency’s internal “crisis”, as we currently see happening with the Dollar due to the US-China trade war.
“Let’s end the malign neglect of the international monetary and financial system and build a system worthy of the diverse, multipolar global economy that is emerging.” Carney in his own words.
It is clear that the banks are desperately trying to get on the blockchain express, as long as they realize the potential the revolutionary technology behind Bitcoin brings with it.
We wouldn’t expect the head of a central bank praising Bitcoin or Libra, as of yet, but even thinking of making their own digital currency, that is decentralized, yet managed by the central banks, is kinda cute, if not Ripple-like.
It is expected to see more cryptocurrency adoption by central banks and other traditional financial institutions as time passes, and as the baby-boomer generation learns how to properly “do the math”.
Read about an 87-year old Swiss Bank that started to do business with crypto in our previous article.