Former Senior Federal Reserve Official: US Dollar is Best Reserve Currency, Not Libra
Talk around the regulation of Facebook’s Libra stable coin is intensifies as the potentially mega disruptive digital asset aims to launch in 2020. Earlier in August, the Governor of the Bank of England, Mark Carney, proposed the development of digital currencies as a suitable replacement of the US Dollar.
The adoption of digital assets provides diversification of assets for most economies and most importantly reduces the domineering influence the dollar has on the national currencies. These assets would be a better reserve currency than using another nations’ sovereign currencies as the reserve, Carney said.
‘US Dollar Provides the Best Hedge’
However, a former U.S New York Fed trader and senior Federal Reserve official Simon Potter, disagrees with Carney’s comments saying the dollar still provides the best hedge. Speaking in his first interview since leaving the trading desk, he said,
“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 and that makes life much harder for the global economy.”
Libra Regulation Calls Yet Again
The launch of Libra cryptocurrency is a terrifying proposition for most governments in the world which has led to various authorities calling for strict regulations to be implemented. The increasing fear of reduced monetary sovereignty and money laundering across the globe are some of the persistent reasons hindering the smooth launch of Libra come 2020.
Potter believes the regulation of stablecoins and other digital assets should lie with the central bank to prevent private institutions from coordinating to create their own assets.
“Central banks should be very concerned about the private sector doing this. A sovereign currency is designed to protect people and get good outcomes. The private sector is much more interested in selling products.”