In the wake of increased tension in the ongoing US and China war, Bank of England, Governor Mark Carney has proposed a solution to end the Dollar's position as the global reserve currency.
As per Bloomberg, Carney, told his audience at the U.S. Federal Reserve’s annual symposium in Wyoming this week that one of the key ways to solve worsening economic conditions is to replace the use of the US dollar as the global reserve currency.
However, while proposing a replacement of the dollar, Carney was specific regarding what type of currency should serve as a unit for global reserve. According to him, the world economy would be better off if countries used a type of digital currency similar to the one planned by social media giant, Facebook.
Facebook revealed plans to launch a stablecoin cryptocurrency dubbed Libra whose value is pegged to a basket of different global fiat currencies and other assets. That form of distribution apparently allows the money not to suffer adverse price fluctuation that could be caused by external factors such as the current trade war, and eventually affect the global economy.
It is this type of currency that Mark Carney proposed to replace the dollar as a global reserve currency, although the Bank of England Governor labeled his version as a Synthetic Hegemonic Currency (SHC) that will be issued by a network of central banks.
Meanwhile, regarding Facebook's Libra and the regulatory challenges against the launch of the currency, Carney said,
“Even if the initial variants of the idea prove wanting, the concept is intriguing. An SHC could dampen the domineering influence of the U.S. dollar on global trade."
Carney also expressed a conviction that such a digital currency will be a better option than using any other government-supported currency such as China's renminbi.