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Mark Carney the governor of the Bank of England has suggested that Libra could be a threat to the global dominance of the US dollar.

He has lead his argument saying  that it could be replaced by a global digital alternative to end a savings glut that resulted in 10 years of low inflation and ultra-low interest rates.

This is clearly the fault  of central bankers who initiated QE after the great financial crisis. He went on to say  a  new digital currency  backed by a large group of counties could unlock dollar funds that governments currently hoard as an insurance policy in uncertain times.

Speaking about the dollar at the Jackson Hole Symposium he said a digital currency “could dampen the domineering influence of the US dollar on global trade”

“If the share of trade invoiced in [a digital currency]were to rise, shocks in the US would have less potent spillovers through exchange rates, and trade would become less synchronised across countries.

“The dollar’s influence on global financial conditions could similarly decline if a financial architecture developed around the new [digital currency]and it displaced the dollar’s dominance in credit markets. By reducing the influence of the US on the global financial cycle, this would help reduce the volatility of capital flows to emerging market economies.”

The Bank of England welcomed the announcement of Libra earlier this year and unlike other central banks seem warmer to the idea. The EU antitrust organisation are also said to be investigating Libra as we speak.  

In the report Carney went on to say:

“Retail transactions are taking place increasingly online rather than on the high street, and through electronic payments over cash.

“The most high-profile of these has been Libra, a new payments infrastructure based on an international stablecoin fully backed by reserve assets in a basket of currencies including the US dollar, the euro and sterling. It could be exchanged between users on messaging platforms and with participating retailers.

“There are a host of fundamental issues that Libra must address, ranging from privacy to operational resilience. In addition, depending on its design, it could have substantial implications for both monetary and financial stability.”

Onward and upward for Facebook’s Libra and cryptocurrencies then, they sure have Governor Carney’s approval.