Former Fed officials: Ending US dollar hegemony with digital currency simply won't work

Former Federal Reserve Board official Simon Potter said recently that it is meaningless to hope that the digital currency will replace the dollar to end the dollar hegemony.

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The central bank is unlikely to make a fuss about virtual currency

Last month, Bank of England Governor Mark Carney proposed replacing the dollar with a digital currency (such as Facebook's stable currency Libra), ending the dollar's dominance. Carney believes that this is a better option than replacing the US dollar with another country's currency.

On September 25, former senior Fed official Potter, who was in charge of the Federal Reserve Bank of New York's trading department, said in an interview with BNN Bloomberg that the Bank of England governor's proposal "disregarded the benefits of using the US dollar as a reserve currency." He added:

“When you have a large and highly liquid capital market in the United States, I don’t see any reason to complicate matters. If there is no currency to basically price things and have a very good market, This will cause more difficulties for the global economy."

Although Potter believes that central banks are unlikely to "collaborate around virtual currency," private companies may do so.

“The central bank needs to be very concerned about the private sector’s virtual currency. […] A country controls its currency to protect people and gain good public interest. The private sector is more interested in selling products.”

Libra is not allowed

In July of this year, Carney said that instead of considering the potential drawbacks of the Libra project, one must recognize the problems Facebook is trying to solve with its stable currency.

He also pointed out that due to the size of the project, Libra must be perfect and added:

“The result is nothing more than success or failure. If successful, it will become a systemic thing because it will involve a large number of users. If you are using a systemic payment system, it needs to reach 5 sigma (5 sigma, measure The level of confidence in the results of the scientists means that if the results are accidental and 3.5 million experiments are repeated, the results of the expected results will not appear more than once. The system must be online without downtime, without any trouble. The problem cannot cause people to suffer losses due to system problems."