In August, Bank of England Governor Mark Carney called for the world to end the U.S. dollar’s status as the dominant global reserve currency, and suggested Facebook’s proposed Libra cryptocurrency as one possible replacement option. According to former Federal Reserve official Simon Potter, however, that argument makes no sense.
Potter addressed the issue on Wednesday, while attending the Peterson Institute for International Economics gathering in New York. As BNN Bloomberg reports, he argued that Carney’s desire to reduce the dollar’s trade importance ignores the real benefits other nations have enjoyed as a result of the dollar’s reserve currency status:
“I see no argument that makes sense to have something that complicated out there when you have large, liquid capital markets in the U.S. 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.”
However, both men do apparently agree that central bankers need to maintain their current control over the existing monetary system and have expressed concerns that private sector companies might “coordinate” around a singly digital currency.
“Central banks should be very concerned about the private sector doing this,” Potter said. A nation’s control of its currency “is designed to protect people and get good outcomes. The private sector is much more interested in selling products.”