Mark Carney, Bank of England governor opines Facebook’s Libra would one day replace the USD as the king of the foreign exchange market. He further added reasons for why the greenback is losing its luster.

The dollar continues to be the world’s reference currency ever since the 1944 Bretton Woods agreement.  During this agreement, several critical units were allotted to the value of the greenback.  The USD retains its global supremacy since then.

The International Monetary Fund reports that the dollar accounts for nearly 62 percent of the global foreign exchange reserves during the first quarter of 2019.

The European single currency accounted for 20.2 percent, and China’s Yuan accounted for 2%

The world economic order is changing, and the dollar is losing its sparkle.  In recent bankers meet in Wyoming, Carney stated, “US developments have significant spillovers onto both the trade performance and the financial conditions of countries even with relatively limited direct exposure to the US economy.”   He further opined, “In the longer term, we need to change the game.”

Carney opines that central banks being the public sector would provide the best support for the new virtual currency.  The mushrooming of different types of virtual currencies keeps the central bankers anxious as they are unregulated.

US President Donald Trump opined that Bitcoin and Libra have no standing nor dependability – like the dollar.

While several commentators believe that Washington will not permit the greenback to lose its cherished status as the premier global reserve currency and if it should happen, there will be a fight about it.  The US would not allow it to happen without a fight.

Concerning Libra, Agnes Benassy-Quere, a researcher at the Paris School of Economics, stated, the “Central banks are a little annoyed by this (Facebook) bid to privatize currency.”

With Bitcoin being decentralized and Libra co-managed by 100 partner firms, including Facebook itself, a lot is set to happen in terms of the global economic system. It is not going to be easy for any cryptocurrency to dethrone the dollar.

While all this has been happening, Japan provides for a friendly jurisdiction for cryptocurrency trading and has therefore eliminated the consumption tax on the Bitcoin. While Japan is not concerned about the capital outflow through cryptocurrencies, China is concerned. 

“Because of fear of capital outflows, China considers all financial assets as enemies. But we are not worried about capital outflows. We love the technology behind virtual currency. And interacting with the technical community.”