Top Economist Explains Why A Crypto Can End The Triffin Dilemma
The dilemma is responsible for the trade deficit experienced by the US due usage of the dollar as a global reserve.
Can Private Crypto End US Trade Deficit?
The current disparity being faced by the United States dollar could be solved by cryptos. This is according to a top economist working with the FRB in St. Louis. The economist made the remarks on Tuesday during a Twitter session where he responded to questions from the public. David Andolfatto represented the federal institutional that makes up part of the United States banking sector. Andolfatto is the vice president of the research unit.
A user wanted to know if cryptos can be deployed to solve the Triffin Dilemma. This is a conflict that has been around for 50 years over differences between the US dollar and other global monetary policies for nations whose currency serves as world stores. In other words, the dollar is known to be a global reserve currency for ages. However, if the US wants to retain this status, then it must be ready to suffer trade deficits.
Andolfatto said that The Triffin Dilemma is a double double-edged sword of owning a currency that plays the role as the global storage currency. The economist pointed out that a crypto can be used to end this standoff by eliminating the trade deficiency.
Can Cryptocurrencies Take Over The Dollar
Users also enquired on a number of issues. A section of the public wanted to know Andolfatto’s view whether the dollar could be replaced by cryptos in the near future. Others wanted to know if we have a chance that the Federal Reserve might consider enacting monetary policies for the crypto industry.
However, Andolfatto raised doubts with both arguments. He said that the top bank might not enact policies for cryptos since they are privately owned. He pointed out that the government is not mandated to manage private monies.
On the dollar being replaced by cryptos, the economist pointed out that it might not be possible. He stated that for cryptos, there is no necessity of having a decentralized agreement in terms of record keeping. He concluded the session by claiming that in the near future, we might not have a demand for cryptos toppling the demand for already established reserve monies.