Author
Jay Ashar

Date published
August 29, 2019

Categories

Blockchain

Economy

Payments

Mark Carney, Bank of England governor, has proposed the creation of a global digital currency as a way of stabilising global financial systems and protecting the sector from trade and currency wars.

Speaking at the US Federal Reserve sponsored Jackson Hole Symposium in Wyoming, Carney said that a "Synthetic Hegemonic Currency" (SHC) governed by the public sector and backed by a number of central bank digital currencies could replace the US dollar as the global reserve currency, and that this would be preferable to the alternatives, such as the Chinese Yuan/Renminbi.

He said: "An SHC could dampen the domineering influence of the US dollar on global trade. If the share of trade invoiced in SHC were to rise, shocks in the US would have less potent spillovers through exchange rates, and trade would become less synchronised across countries. By the same token, global trade would become more sensitive to changes in conditions in the countries of the other currencies in the basket backing the SHC.