Unchained Fed Economist on the Prospect of the USD Losing Global Reserve Status: 'Who Cares?' - Ep.140
Oct 8, 2019
David Andolfatto, Senior VP at the Federal Reserve Bank of St. Louis, shares his insights on cryptocurrency and central banking. He discusses the regulatory challenges facing Facebook's Libra and why he believes Bitcoin could sidestep those hurdles. Andolfatto provocatively claims that the loss of the USD's global reserve status isn’t as crucial as some think, citing other successful currencies. He also explores the design of central bank digital currencies and the implications for commercial banks and fractional reserve banking.
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Libra's Intrigue
- Libra is intriguing due to Facebook's massive existing network of over 2 billion users.
- This network facilitates information transfer, which is the essence of money and payments.
Libra's Impact
- Libra's main impact will be on payment processors, potentially competing with existing monetary instruments like USD or Euro.
- Currency competition is a constant concern for central banks.
USD Primacy
- The USD's primacy is not a major concern; many prosperous countries lack a reserve currency.
- A nation's wealth stems from its people, productivity, and opportunities, not solely its currency's status.