FX.co ★ Will the dollar become an outsider?

An interesting and extremely important topic was raised by Mark Carney, head of the Bank of England. He said that the US currency should be deprived of the status of a global reserve means of payment. To do this, the world central banks must unite and find a replacement for the dollar, M. Carney is sure.

Currently, the "American" remains the world's main reserve currency, analysts emphasize. The head of the Bank of England agrees with this, specifying that the US share in the global economy is gradually declining. M. Carney draws attention to the significant imbalance associated with the presence of the American currency in world trade. For example, on the eve of the 2008 financial crisis, the share of developing countries (EM) in the world economy was 45%, and to date, it has increased to 60%. However, there has not been a proportional increase in the popularity of EM currencies, and at the moment, about 50% of all international payments are made in dollars.

The United States accounts for only 10% of all world imports, which contributes to the growth of demand for American assets. In this situation, many countries were dependent on the dynamics of the US economy, experts emphasize. Some States that have nothing to do with the American currency, are forced to trade in dollars, reminds M. Carney.

In the world of fiat means of payment, there is a permanent devaluation, so market participants need some additional assets that will be a fair measure of their real value. Analysts believe that the mutual devaluation of currencies to determine their real value without a globally reliable asset is impossible. Such an asset can be gold, financiers emphasize. At the moment, the US dollar has assumed this role.

Due to its unique status of the world reserve currency, the "American" has become almost invulnerable, the head of the British regulator notes. The current situation makes the devaluation of the dollar almost impossible. However, M. Carney does not doubt its necessity and advises to carry out this procedure in the near future.

Taking into account such factors as the inadequacy of the status of the dollar, the strong dependence of the world economy on the United States, as well as the presence of the largest competitor – the Chinese economy, it is advisable to find a replacement for the American currency, M. Carney is sure. A multipolar world needs a multipolar currency, so to begin with, the US dollar can be replaced by a basket of currencies, the head of the Bank of England sums up. He considers the best option when the issuer of a new means of payment becomes the public sector, namely the world central banks. Further steps on the path of reform can be the development of their own cryptocurrencies and combining them into a global network.