Going against the central bank grain Mark Carney has proposed a cryptocurrency akin to Facebook’s Libra crypto as a hedge against US dollar dominance. A former senior Federal Reserve official thinks he is barking up the wrong tree.
Dollar Dominance
Last month Bank of England governor Mark Carney advocated for digital currency in a radical proposal for an overhaul of the global financial system. However, according to former senior Federal Reserve official Simon Potter, this plan ignores some of the benefits of having the greenback as a reserve currency.
According to Bloomberg, Carney said the dollar should eventually be replaced by something like Facebook’s proposed Libra cryptocurrency. At a Peterson Institute for International Economics event in New York this week Potter defended the dollar stating;
“I see no argument that makes sense to have something that complicated out there when you have large, liquid capital markets in the US. Not having one currency that you can basically price things and have a deep market in, that makes life much harder for the global economy.”
The greenback currently dominates global markets being the top foreign exchange reserve currency for many central banks, in addition to being used to settle international debts. As a result, America has greatly benefited from foreign investment which has helped the nation control its borrowing.
The one thing that the two financial heavyweights do agree on is that central banks and policymakers should keep control over the currency system. Allowing a profit-driven, private corporation to do so (that too with crypto) would not be in the interest of the public or the nation.
Facebook Under Fire Again
It is for this reason that Facebook has come under fire from all angles in recent weeks. It has been reported that the Justice Department intends to investigate the social media giant after prodding from US Attorney General William Barr.
In addition to an investigation by the Federal Trade Commission, Facebook is also under fire as to whether it has harmed competition in violation of antitrust laws. The two regulators have targeted four of the world’s largest tech giants for monopolistic practices. Apple, Amazon, Alphabet (Google) and Facebook are all facing additional scrutiny over their business practices.
These accusations are separate to the ongoing investigations into the Libra project but they are related. The concerns are the same; should one billionaire and a consortium of tech monopolies be in control of potentially the largest currency on earth?
Should central banks launch their own cryptocurrencies to stop Facebook’s crypto? Add your thoughts below
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