BoE’s Mark Carney: Digital currency “could dampen the domineering influence of the U.S. dollar”

• The world economy is being reordered and the US dollar effect cannot be ignored.
• Mark Carney believes that a central bank-backed digital currency could displace the US dollar as the domineering currency.

The influence of the US dollar has been felt for over a century. A looming recession in the United States economy is sending jitters around the world. In his latest comments at the Economic Policy Symposium, the Bank of England governor Mark Carney believes that a central bank-backed digital currency could displace the US dollar as the domineering currency in the world.

“While the world economy is being reordered, the U.S. dollar remains as important as when Bretton Woods collapsed,” Carney stated.

The governor is open to suggestions that would replace the US dollar. In fact, he went ahead to suggest a digital currency supported by an association of central banks. Carney said:

“It is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies.”

He added:

“An SHC could dampen the domineering influence of the U.S. dollar on global trade.”

Although Carney did not directly mention cryptocurrencies, he admitted that new technologies offering efficiency and lower transaction costs are coming into play to disrupt the traditional system.

“The relatively high costs of domestic and cross border electronic payments are encouraging innovation, with new entrants applying new technologies to offer lower cost, more convenient retail payment services,” Carney explained.