Washington risks devaluing the dollar’s status in the future if it fails to respond to innovation, says the former regulator.
The ex-head of the United States’ commodities regulator thinks the government must digitize the dollar and take power away from central banks.
Giancarlo wants independently maintained dollar
In an opinion piece for the Wall Street Journal on Oct. 15, J. Christopher Giancarlo, former chair of the Commodity Futures Trading Commission or CFTC, argued the dollar could lose status in the future.
This would be specifically due to other countries rolling out digital currencies. The answer, he argued, is to create a new form of dollar.
“We propose a digital dollar—a government-sanctioned blockchain protocol, created and maintained by an independent nongovernmental group but administered by banks and other trusted payment organizations,” he explained.
Giancarlo continued:
“Cash brought into the system would be exchanged for digital U.S. dollars on a blockchain, with the cash lodged in special escrow accounts maintained by the Federal Reserve.”
How decentralized?
Unlike many banking sources that have discussed digital currency, the digital dollar concept hints directly at decentralizing power over money.
While stopping short of claiming central banks should lose their ability to control national currencies, Giancarlo nonetheless argues that by shunning digital currency, the U.S. is set to weaken the dollar’s appeal. He warned:
“Significant actors, including central banks and social media platforms, may launch new currencies in the next few years. As their networks grow, they could eventually erode the dollar’s status as the most popular currency for international exchange.”
Giancarlo compared the potential dollar decline to the pound sterling’s loss of power after World War II.
The theory chimes with Bitcoin (BTC) proponents, with Saifedean Ammous’ book “The Bitcoin Standard” also noting global reserve currencies come and go at regular intervals.
For Ammous, however, the reason for this is tied to poor government handling of currency, including overt meddling in its issuance and value. Leaving the gold standard, he claims, all but guaranteed the fate of modern fiat currencies, including the dollar.
As Cointelegraph reported meanwhile, Giancarlo previously said he expects 2019 to become the starting point for a concerted international response to cryptocurrencies from regulators.
