Former Fed Official: Cryptocurrency Replacing the Dollar Is Absurd

Former Federal Reserve official Simon Potter recently stated in an interview that the idea of using cryptocurrencies to replace the dominant position of the US dollar is completely far-fetched.

The Central Bank Unlikely to Compromise

In August this year, the Governor of the Bank of England, Mark Carney, suggested using digital currency to replace the US dollar and end its long-standing dominance, similar to Facebook's stablecoin project Libra. Carney stated:

I think it is a better choice than to use another country's legal tender, such as the Chinese yuan.

During a Bloomberg interview on September 25th, Potter, a former senior official of the New York Fed's trading desk, expressed that Carney's suggestion undermines the "advantage of the US dollar as a reserve currency." He further explained:

When you have a massive and highly liquid capital market in the United States, I don't see any reason to complicate things. If there isn't a currency that serves as a basic pricing mechanism and has a very deep market, it would create more difficulties for the global economy.

According to a report on Cointelegraph, although Potter believes that central banks are unlikely to "coordinate with cryptocurrencies," private companies might. He added:

Central banks should be very concerned about the activities between the private sector and cryptocurrencies. The purpose of a nation controlling its currency is to protect its people and to serve the public interest. The private sector is more interested in selling products.

Libra as a Solution

In July this year, Carney pointed out that regardless of any potential drawbacks, the public must be aware of the problems Facebook is trying to solve with its stablecoin.

Carney emphasized that due to the enormous scale of Libra, its practical application must be flawless, stating:

It's do or die. If it works, it could be an ecosystem because of the scale it has. If you're going to use a payment system, it has to be at the highest standards of credibility. The system has to be continuously online, not fail, not have any glitches, and not lead to losses for the public.

Further Reading

• Neo to become the first blockchain member of the .NET Foundation
• IMF Warns: "Stablecoins Could Seriously Disrupt Current Global Payment Frameworks"

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