the central bankers of the world convene
in the scenic Rocky Mountain resort of Jackson Hole, Wyoming,
in furtherance of the challenging task
of sustaining the global hegemony of our plutocratic overlords.
This year, the usual smug
of the meeting was somewhat disturbed
when the Governor of the Bank of England, Mark Carney
proposed the introduction of a Synthetic Hegemonic Currency (seriously!)
to replace the US dollar as the global reserve currency.
The Bank of England governership has served in recent years
as an outlet for what the spooks call a
wherein some truth is allowed to leak into the mainstream discourse
in the service of managing a situation that has gotten out of control.
Mervyn King, previous BoE Governor,
was notable for
of one of the essential tenets of Modern Money Theory,
that banks create money
when they issue loans.
Carney keeps the tradition alive.
Enjoy Carney's entire speech,
which is surprisingly readable for a statement from a central banker.
Here's a snippet:
Technology has the potential to disrupt the network externalities that prevent the incumbent global reserve currency from being displaced. . . . The Bank of England and other regulators have been clear that . . . the terms of engagement for any new systemic private payments system must be in force well in advance of any launch. As a consequence, it is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies. Even if the initial variants of the idea prove wanting, the concept is intriguing. It is worth considering how an SHC in the [international monetary and financial system (IMFS)] could support better global outcomes, given the scale of the challenges of the current IMFS and the risks in transition to a new hegemonic reserve currency like the Renminbi. 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. The dollar's influence on global financial conditions could similarly decline if a financial architecture developed around the new SHC and it displaced the dollar's dominance in credit markets. By reducing the influence of the US on the global financial cycle, this would help reduce the volatility of capital flows to EMEs. Widespread use of the SHC in international trade and finance would imply that the currencies that compose its basket could gradually be seen as reliable reserve assets, encouraging EMEs to diversify their holdings of safe assets away from the dollar.
Whooee! Dollar death watch, anyone?