“Ethical Markets thanks all our monetary experts for weighing in on this false alarm from Tyler Durden re. Mark Carney‘s speech, which I read carefully. I agreed with most of Carney’s points, including focusing on the fragility of the “pipes”! As you all know, this problem is of the market’s structure which I drew attention to in my paper for the UNEP Inquiry on Sustainable Financial Systems (“Perspectives on Reforming Electronic Markets & Trading” (2014) www.unepinquiry.org). I sounded the alarm to our ESG/SRI/green investing community “While we are reforming corporate and financial accounting, we need to also see that the plumbing is broken!“.
I also prefer that a new updated version of Keynes bancor should remain as an accounting system, rather than trying to also support issuance of a currency.
As I read the Facebook “libra” White Paper, it appalled me as a private power grab for eventual profit by a company monopolizing the internet platform (funded by taxpayers), while benefiting from network effects. Our seminar co-sponsored by our partner the World Academy of Art & Science, Nov 2018 explored these issues (see “The Future of Democracy Challenged in the Digital Age“ CADMUS, Oct,2018).
Facebook’s “libra” represents an illegal incursion into the sovereignty of democratically-elected governments, while claiming that the “libra” would be 100% backed by: guess what, treasuries issued by sovereign governments!!
We posted and I read Prof Bob Hockett’s wonderful background paper reminding us all of the Bretton Woods debates, the US role in preventing Keynes original proposal of the bancor. And my thanks too, for Prof. Huber’s rapid response. All these are reflected below. Please keep us updated as these issues evolve.
~ Hazel Henderson, Editor”
Quote by Ellen Brown
“Hi Hazel, sorry to miss your email yesterday. I was on a plane from Bogotá to Los Angeles. I agree with Joseph and Bob (Hockett) that Mark Carney wasn’t at all proposing to eliminate fiat currencies or to hyperinflate them away against a new international digital currency. As Bob says, what he was proposing sounds more like a digital form of Keynes’ bancor. But the bancor wasn’t actually a currency. It was just an accounting system, where countries would get credits for international sales and debits for international purchases. Individuals couldn’t acquire it or trade with it. Libra actually is a currency, or is projected to be a currency, which people can buy with national currencies and use for trade. An international publicly-issued Libra would definitely be better than a private corporate-issued Libra. One concern I would have with expanding the basket of currencies backing a new public reserve currency is that while a few big countries might be sharing the wealth rather than just one, developing countries would still have the problem of having to acquire reserves in currencies not their own, the problem of capital flight into the stronger currencies or the public Libra, etc. A digital bancor-style clearing system sounds better to me.
Those are my thoughts of the moment. Interesting question!”
Quote by Joseph Huber
“Dear Hazel,
Hopefully you are not expecting more than I am able to deliver.
Today and yesterday I did not yet find the time to read Carney’s speech in the original. Which is of course recommendable:
https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/the-growing-challenges-for-monetary-policy-speech-by-mark-carney.pdf?la=en&hash=01A18270247C456901D4043F59D4B79F09B6BFBC
So far, I just had a glimpse at two or three web postings (The Guardian and the Financial Times). The one you sent me feels a bit rushed.
That Carney has made the dollar hegemony a problem to be solved and called for a new approach to the problem is certainly remarkable, but nothing new. Within the IMF there are voices since decades now who want to develop the IMF’s Special Drawing Rights into the new world currency, trying to avoid in the future what has been the case in the past, that is, one or two single national currencies as the all-dominating ones. Carney is said to look for an important job at the IMF, and quite a few seats there would clearly vote for his perspective…
Today, though, it should be noted that the currency basket represented by SDRs still consists of about two thirds US dollars.
Is that a Libra-like approach? Rather the other way round: the Libra is an SDR-like idea, but managed by a private corporation rather than an intergovernmental body of treasuries and central banks.
Digital currency does not automatically mean crypto token. The Bank of England and other central banks are presently conceiving of a central bank issued digital currency more in terms of conventional account balances rather than crypto tokens (which, of course, are not excluded).
Gold-based? Can’t believe, certainly not, not even in a Bitcoin-like simulation of scarcity. In my opinion, artificial money scarcity is nonsense anyway. We need enough money, and if in doubt a bit too much is much better than much too little.
Does Carney foresee the end of sovereign fiat currencies? Certainly not. His concern is about a new ‘international architecture’ of sovereign fiat currencies.
That’s all I can say at this point in time.”
Original post on Zero Hedge: