Carney urges IMF to ‘change the game’, ending to dollar supremacy

Mark Carney, the Bank of England Governor during his speech in Jackson Hole, Wyoming, highlighted the need to challenge dollar supremacy. Carney, while addressing central bankers from across the world said that the dollar needs to be replaced with a new international monetary and financial system which is more global. He urged the International Monetary Fund to ‘change the game’ by switching to a virtual currency rather than waiting for the dollar to be replaced by another national currency such as China’s renminbi.

Carney said, “In the longer term, we need to change the game. When change comes, it shouldn’t be to swap one currency hegemon for another.”

Carney’s suggestion sounded more relevant today than ever, especially when the world economy is crumbling under the pressure of US-China trade war, currency war, market uncertainty, capital outflows, political protests, negative growth, and inflation. Carney said, “The combination of heightened economic policy uncertainty, outright protectionism, and concerns that further, negative shocks could not be adequately offset because of limited policy space is exacerbating the disinflationary bias in the global economy. What then must be done?”

In his opinion, a digital currency, on the likes of Facebook’s Libra, would not only help absorb the market shocks better but also help central banks in managing the economic slump, unlike the current scenario where they are trapped in a low-interest rates strategy.

The BoE chief, who is also one of the candidates contesting for the position of IMF head, said that with digital currency coming into play, the need to hoarding US currency would be removed and one country’s monetary policy would no longer be driving the global economy.

Mark Carney, the Bank of England Governor during his speech in Jackson Hole, Wyoming, highlighted the need to challenge dollar supremacy. Carney, while addressing central bankers from across the world said that the dollar needs to be replaced with a new international monetary and financial system which is more global. He urged the International Monetary Fund to ‘change the game’ by switching to a virtual currency rather than waiting for the dollar to be replaced by another national currency such as China’s renminbi.

Carney said, “In the longer term, we need to change the game. When change comes, it shouldn’t be to swap one currency hegemon for another.”

Carney’s suggestion sounded more relevant today than ever, especially when the world economy is crumbling under the pressure of US-China trade war, currency war, market uncertainty, capital outflows, political protests, negative growth, and inflation. Carney said, “The combination of heightened economic policy uncertainty, outright protectionism, and concerns that further, negative shocks could not be adequately offset because of limited policy space is exacerbating the disinflationary bias in the global economy. What then must be done?”

In his opinion, a digital currency, on the likes of Facebook’s Libra, would not only help absorb the market shocks better but also help central banks in managing the economic slump, unlike the current scenario where they are trapped in a low-interest rates strategy.

The BoE chief, who is also one of the candidates contesting for the position of IMF head, said that with digital currency coming into play, the need to hoarding US currency would be removed and one country’s monetary policy would no longer be driving the global economy.

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