On Tuesday, a representative of the Federal Reserve Bank of St. Louis has offered a viewpoint how to solve current US dollar disparities using digital currencies.
The economist of the bank was asked several questions the answers to which were published by him in Twitter. It is worth mentioning that this bank is a part of the American central banking system.
One of the questions for David Andolfatto was about a possibility of digital currencies to get a solution of Triffin Dilemma. The core of this dilemma lies in the conflict between monetary policy conducted at the national and global level as dollar is considers to be the world’s reserve. The maintenance of this role can be achieved only by incurring a trade deficit.
According to Andolfatto, it is a challenge to possess a currency that dictates reserve for the whole world, so if cryptocurrency could take the place of dollar in this responsible task, Triffin Dilemma could be eliminated too.
Several more questions regarding cryptocurrency were offered to Andolfatto. He was asked if digital coming could become a replacement for US dollar and if there were any chances for the Federal Reserve to consider crypto monetary policy.
The economist did not give a direct answer to both questions explaining that crypto coins are private monies and can not be used by central bank. Moreover, it is almost impossible to replace dollar with digital currencies too.
He also added that the demand for digital coins has not yet exceeded one for existing reserve currencies.