Fed Economist on the Prospect of the USD Losing Global Reserve Status: 'Who Cares?' - Ep.140

David Andolfatto, senior vice president at the Federal Reserve Bank of St. Louis, gives his thoughts on Facebook's Libra, including why regulatory issues will make it hard to compete with the US dollar, and why Bitcoin wouldn't have such issues. He also says, "who cares?" about the US dollar losing global reserve status, pointing out that many prosperous countries have currencies that don't function as global reserves. He tells us how he would design a central bank digital currency, and why, even if central banks enabled citizens to open accounts with them, thus bypassing commercial banks, it wouldn't drive banks out of business. We also cover how that could affect fractional reserve banking and credit creation, the People's Bank of China's soon-to-be-issued digital yuan, and why blockchains haven't yet substantially helped the unbanked, as they were originally touted to do.

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Episode links: 

St. Louis Federal Reserve: https://www.stlouisfed.org

David Andolfatto: https://research.stlouisfed.org/econ/andolfatto/sel/

David's blog: http://andolfatto.blogspot.com

Letter from House Reps to Fed Chair Jerome Powell: https://static.coindesk.com/wp-content/uploads/2019/10/Foster-Hill-US-Crypto.pdf

Talk on blockchain, cryptocurrency and central banks: https://www.stlouisfed.org/dialogue-with-the-fed/blockchain

https://www.stlouisfed.org/~/media/files/pdfs/dwtf/blockchain_082918.pdf?la=en

Blog post on cost efficiency of a centrally managed ledger: http://andolfatto.blogspot.com/2017/12/fedcoin-and-blockchain.html?spref=tw

David’s paper on the impact of central bank digital currency private banks: https://s3.amazonaws.com/real.stlouisfed.org/wp/2018/2018-026.pdf

Raskin and Yermack paper: https://ccl.yale.edu/sites/default/files/files/Raskin_Max_and_Yermack_David_The%20Future%20of%20Central%20Banking.pdf

David on FedCoin: http://andolfatto.blogspot.com/2015/02/fedcoin-on-desirability-of-government.html 

Philadelphia Federal Reserve banker Patrick Harker on a G20 CBDC being inevitable: https://www.reuters.com/article/us-usa-fed-harker-digital/feds-harker-digital-central-bank-currency-inevitable-idUSKBN1WH1L4

Related Unchained interview: Dong He and Yan Liu on central bank digital currencies: https://unchainedpodcast.com/the-imf-on-how-to-design-central-bank-digital-currencies/