In 30 days from now, when we come out of this social distancing, quarantine, etc., people are going to fundamentally question their faith in the US Dollar, thus creating an opportunity to create a digital dollar, as well as cryptocurrencies, such as bitcoin. People don’t remember colonial notes or how the Massachusetts Bay Colony in 1690 created its own money.
Colonial notes, which were issued between 1690 to 1775, served as a payment for military campaigns and public works for each issuing colony. Back then, the colonial notes were issued to meet the needs of the expanding population and encourage local trade.
The US Dollar, as we know it today at least, was created in 1913 when the Federal Reserve was created. With the Bretton Woods Conference in 1944, and the Marshall Act after World War II, the US Dollar replaced the pound sterling as a global reserve currency.
Currently, the national debt is 23 trillion. When you add the $6 trillion now being printed, we’re looking at $29 trillion. Some states, particularly New York, California, and Texas, might consider creating their own currencies. New York might create the New York Dollar. It’s had its own currency before. It was called the New York Pound, and acted as the currency of the province and state of New York until 1793.
In thirty days, we’re going to be discussing new currencies, whether that be the digital dollar or the New York dollar or an IMF special drawing right. When that happens, some attention will be placed on Bitcoin and Dogecoin, as folks decide for themselves what they trust.
If a crisis grips Europe soon, as took place in the aftermath of the 2008 financial collapse, we will likely see calls for a digital euro heighten ahead of calls for a digital dollar. France’s central bank is already experimenting with digital currencies.
The Banque de France published a request for proposals for a central bank digital currency “experiment” with a central bank digital currency.
“We as central banks must and want to take up this call for innovation at a time when private initiatives – especially payments between financial players – and technologies are accelerating, and public and political demand is increasing,” François Villeroy de Galhau, Governor of the Banque de France, said in a Dec. 4 speech on CBDCs. “Other countries have paved the way; it is now up to us to play our part, both ambitiously and methodically.”
The France central bank writes: “Indeed, any decision to create a CBDC is a matter for the Eurosystem. Consequently, the Banque de France does not intend to perpetuate or conduct such experiments on a widespread basis.”