During the Economic Policy Symposium in Jackson Hole, Wyoming, Bank of England Governor Mark Carney proposed that a central bank-supported digital currency could potentially replace the U.S. dollar as the global reserve currency. He argued that the current international monetary and financial system, dominated by the dollar, creates significant global economic vulnerabilities. The dollar’s dominance, he noted, often leads to spillover effects from U.S. economic policies that impact other countries, especially in an era of heightened globalization and trade disputes.
Carney suggested a "Synthetic Hegemonic Currency" (SHC), potentially managed by a coalition of central banks, as an alternative to the dollar. This digital currency would be backed by a basket of national currencies and could reduce global reliance on the dollar, which currently serves as the primary currency for international transactions and securities issuance. Carney explained that digital technology could disrupt the dollar’s dominance by enabling faster, lower-cost payments, which he indicated as necessary for a more stable international monetary system.
While Carney did not directly endorse cryptocurrencies, he acknowledged their role in driving innovation in payments. He referenced Facebook's Libra project as an example of how stablecoins could change the payments landscape but stressed that regulatory frameworks would need to be established well before such systems could launch. Carney concluded that an SHC could offer a balanced approach to managing global economic risks, potentially easing the disproportionate influence of the dollar and providing a more resilient framework for international trade.
