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Thread: The Changing / Emerging Global Landscape

  1. Link to Post #21
    Moderator Cara's Avatar
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    Default Re: The Changing / Emerging Global Landscape

    The Bank of England signals the end of the use of the US dollar as international currency. This is quite a signal. This is from Bloomberg which tends to give a particular narrative... so it may just be political.

    Quote World needs to end risky reliance on U.S. dollar: BoE's Carney

    JACKSON HOLE, Wyo. (Reuters) - Bank of England Governor Mark Carney took aim at the U.S. dollar’s “destabilizing” role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.

    The dollar’s dominance of the global financial system increased the risks of a liquidity trap of ultra-low interest rates and weak growth, Carney told central bankers from around the world gathered in Jackson Hole, Wyoming, in the United States.

    “While the world economy is being reordered, the U.S. dollar remains as important as when Bretton Woods collapsed,” Carney said, referring to the end of the dollar’s peg to gold in the early 1970s.

    Emerging economies had increased their share of global activity to 60% from around 45% before the financial crisis a decade ago, Carney said.

    But the dollar was still used for at least half of international trade invoices - five times more than the United States’ share of world goods imports - fuelling demand for U.S. assets and exposing many countries to damaging spillovers from swings in the U.S. economy.

    Carney - who was considered a candidate to be the next head of the International Monetary Fund but failed to secure backing from Europe’s governments - said the problems in financial system were encouraging protectionist and populist policies.

    Earlier on Friday, U.S. President Donald Trump said he was ordering U.S. companies to look at ways to close their operations in China, the latest escalation of mounting trade tensions between Washington and Beijing.

    Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system.

    As a first step to reorder the world’s financial system, countries could triple the resources of the IMF to $3 trillion as a better alternative to countries protecting themselves by racking up enormous piles of dollar-denominated debt.

    “While such concerted efforts can improve the functioning of the current system, ultimately a multi-polar global economy requires a new IMFS (international monetary and financial system) to realize its full potential,” Carney said.

    China’s yuan represented the most likely candidate to become a reserve currency to match the dollar, but it still had a long way to go before it was ready.

    The best solution would be a diversified multi-polar financial system, something that could be provided by technology, Carney said.

    Facebook’s (FB.O) Libra was the most high-profile proposed digital currency to date but it faced a host of fundamental issues that it had yet to address.

    “As a consequence, 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,” Carney said.

    Such a system could dampen the “domineering influence” of the U.S. dollar on global trade.

    “Even a passing acquaintance with monetary history suggests that this center won’t hold,” Carney said. “We need to recognize the short, medium and long-term challenges this system creates for the institutional frameworks and conduct of monetary policy across the world.”

    Writing by William Schomberg; Editing by David Milliken and Andrea Ricci
    From: https://uk.reuters.com/article/us-us...-idUKKCN1VD28C

    Re:
    Quote best solution would be a diversified multi-polar financial system, something that could be provided by technology
    see posts #14 and #18 above for more on plans for digital monetary system developments.
    Last edited by Cara; 24th August 2019 at 12:06.
    “If you have nothing else to do, you may as well get enlightened”, Pierre Grimes

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  3. Link to Post #22
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    Default Re: The Changing / Emerging Global Landscape

    Top UK bankster argues for new 'synthetic hegemonic currency' to replace sinking dollar

    RT
    Sat, 24 Aug 2019 02:27 UTC


    Form and Function © Reuters/Dado Ruvic

    Bank of England head Mark Carney has urged his fellow central bankers to embrace tech like Facebook's Libra to build a multipolar system, warning against "swapping one currency hegemon for another" - unless it's their hegemon.

    Acknowledging that the US dollar's days as the world reserve currency are numbered, he gushed that "technology has the potential to disrupt the network externalities that prevent the incumbent global reserve currency from being displaced" - and to ensure that Western central banks are properly positioned to take the helm in whatever system replaces it.

    Carney declared that a Libra-like currency - with a few tweaks to silence critics - can bring about a new "multipolar international monetary financial system" (IMFS) during a speech at the Fed-sponsored Jackson Hole Economic Policy Symposium on Friday.

    The Bank of England bigwig warned a who's-who of status quo representatives, shocked many with his suggestion of radical change:
    "Blithe acceptance of the status quo is misguided. When change comes, it shouldn't be to swap one currency hegemon for another. Any unipolar system is unsuited to a multipolar world."
    But it soon became clear his objection was to one particular country winning the unipolar sweepstakes, as he acknowledged that China has long since overtaken the US' trade volume and the yuan is logically next in line for reserve-currency status.

    The yuan, Carney maintained, had too many problems - though he couldn't name any, instead admitting that with the Belt and Road Initiative unfolding, China was ideally positioned to fill the void left by the decaying dollar - and "a multipolar global economy requires a new IMFS to realize its full potential." How to get there without the economic carnage that usually surrounds such a massive paradigm shift? That's where (pseudo?) decentralized cryptocurrency comes in, he suggested.

    "We would do well to think through every opportunity, including those presented by new technologies, to create a more balanced and effective system," Carney continued, with a nod to his Silicon Valley ally. Facebook CEO Mark Zuckerberg met with Carney while Libra was still in the planning process, and while neither have been forthcoming about what they discussed, Carney is one of the few non-corporate leaders to express unqualified support for the not-quite-cryptocurrency, which he calls "the most high profile" of electronic payment systems even though it hasn't actually been rolled out yet and is facing major regulatory scrutiny from governments wary of Facebook's dismal privacy track record.

    Carney framed the embrace of a "synthetic hegemonic currency" as a natural step in breaking up with the dollar, though Libra is backed by a "basket of currencies" that includes not only the dollar but also the pound, euro, and Swiss franc. Noting that trouble in the US economy tends to spill over into emerging market economies which have difficulty absorbing the shock, he claimed a Libra-like coin could reduce the negative impact on those countries if the dollar takes a dive, as if placing emerging markets at the mercy of US, UK, and European central bankers solved the problem. Far from breaking up with the dollar - adopting any central-bank-backed "crypto" as a reserve currency would just make the unhealthy relationship polygamous.

    With the US poised on the brink of a recession, alienating its allies with a sanctions regime that violates their economic sovereignty, and ramping up a trade war it can't conceivably win with China, it's not surprising that establishment stalwarts like Carney are finally coming to terms with the post-dollar future. But a central bank governor, even one a few months away from retirement, proposing such a huge paradigm shift doesn't happen if the central bank doesn't benefit from that shift.

    For a talk touting the virtues of a "synthetic hegemonic currency," Carney's omission of actual cryptos - bitcoin being the obvious name, but any of the less well-known currencies actually in use by real people would have made more sense than Libra, which still exists only in theory - is proof his embrace of the Facebook coin is merely a means to an end. As governments grudgingly accept cryptos - with New Zealand legalizing paying salaries in Bitcoin, and many governments mulling issuing their own digital currencies - central banks live in fear of being sidelined. Libra - and other corporate "cryptos" that are anything but - represents a chance to keep their hooks in the global economy, even when the current system falls apart. If you can't beat them, (pretend to) join them.


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  5. Link to Post #23
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    Default Re: The Changing / Emerging Global Landscape

    The speech referred to in post #21 above (here) from The Bank of England’s Mark Carney at Jackson Hole, Wyoming, USA is here: https://www.bankofengland.co.uk/-/me...D4B79F09B6BFBC
    “If you have nothing else to do, you may as well get enlightened”, Pierre Grimes

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