The Jackson Hole, Wyoming, conference was comprised of current and former central bankers, including Bank of England Governor Mark Carney, who has challenged the dollar’s position as the world’s reserve currency. He argued that it could be replaced by a global digital alternative, a Libra-like currency, to end a savings glut that resulted in 10 years of low inflation and ultra-low interest rates.
Although no one came to an agreement that Carney’s idea for a virtual reserve currency was the answer, participants agreed that the dollar’s dominance is a problem.
There are reasons people rely on the dollar, Adam Posen, a former Bank of England policymaker, argued. He pointed out that countries have tried sharing alternate currencies before and it didn’t work.
“The desire to get out from total dominance of the U.S. currency is probably healthy,” Posen told Bloomberg. “ … the idea that there’s a technological fix that will achieve it strikes me as mistaken.”
Each year since 1978, the Federal Reserve Bank of Kansas City has sponsored a symposium on an important economic issue facing the U.S. and world economies. Symposium participants include prominent central bankers, finance ministers, academics and financial market participants from around the world.
As far as technological changes go, the Federal Reserve announced earlier this month that it will officially create a real-time payments service called FedNow. The move was described by Kansas Federal Reserve President Esther George as the biggest infrastructure upgrade embraced by the Federal Reserve since the ACH system went online in 1972.
The Fed is looking to leverage its pre-existing connections to over 10,000 U.S. banks. While the private service has a large part to play in this market, the Fed’s size, scale and long history in the U.S. payments system mean it can create a level of accessibility to faster payments that could not be matched in the private sector in any kind of reasonable timescale. Instead, the goal of the FedNow service is to serve as an infrastructural platform on which the private sector can easily build.