4 ms·

Major question is then, what currency should be reserve? Euro? - Nowhere near as stable as the dollar, and some quite shaky fundamentals and history? Yen? Pou

by matt-p 2y ago

Major question is then, what currency should be reserve? Euro? - Nowhere near as stable as the dollar, and some quite shaky fundamentals and history? Yen? Pound? Swiss Franc? I suspect Yuan will be unpalatable.

kragen 2y ago
BRICS has been proposing a sort of basket mechanism. Bitcoin is not yet thickly enough capitalized. The historical standard was gold for 3000 years, and that's what backed the dollar until that was "temporarily suspended" in 01971. That's the default.
helloooooooo 2y ago
IMF does have Speecial Drawing Rights that kind of, but not really, acts as a global currency
gizmo 2y ago
The new reserve currency won't be a single country's currency but a basket of currencies, where the ratio contribution of component currencies gets adjusted every once in a while.
- matt-p 2y ago
  Ok and who will administer the basket? I'm not saying it's impossible just a bit impractical perhaps.
  - rongrobert 2y ago
    It is just economically clueless people talking nonsense. Whatever basket we come up with has all the same properties that cause the Euro to not displace USD but worse. Much worse.
    - matt-p 2y ago
      Indeed.
popol12 2y ago
Bitcoin would be the most fair choice for a new reserve currency. It has equivalent properties as gold but is more practical to use, and there's no geographic inequality to mining it. No government could benefit from manipulating it. How cool is that ?
- api 2y ago
  It’s more deflationary than gold due to hard fixed supply plus breakage.
- rongrobert 2y ago
  Of course a middle school level view of currency is "cool".
  - popol12 2y ago
    Strong argument you're making here, thanks mate
- viraptor 2y ago
  > there's no geographic inequality to mining it. Apart from having access to cheap energy which is collocated with... specific geographic features like geothermal / hydro energy which not all countries have access to.
  - popol12 2y ago
    Okay, it's not perfect equality but it is way, way more equitable than geographic features like "gold mine in your backyard"
- tootie 2y ago
  Is Bitcoin even a currency? Who spends it? And who keeps it stable?
  - mkoubaa 2y ago
    It's a reserve. The coupling of reserve and currency is a historical accident, not a fundamental reality
jmyeet 2y ago
The Chinese yuan is not a viable reserve currency. Why? Because it's pegged to a basket of other currencies. It should really inflate in value but Chinese government policy is to undervalue it to aid exports. Exports are ~20% of China's economy. It would devastate the economy if the yuan was allowed to freely float, or at least float with the level of central bank management that other developed nations' fiat currencies have. China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that. So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military. You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency. It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.
- sidewndr46 2y ago
  pretty much every source in the world disagrees with the idea that China doesn't have a retirement system https://www.cfr.org/blog/what-chinese-pension-system-and-why-are-its-problems-hard-fix#:~:text=The%20benefits%20of%20China's%20Old,determined%20by%20individual%20pay%2Din. https://www.cfr.org/blog/what-chinese-pension-system-and-why...
- TheCapeGreek 2y ago
  >It's just a group of randomly selected countries meant to sound nice Source? Pretty sure BRICS is comprised of the largest regional economies that specifically aren't in the first world, that make for useful alliances for Russia & China specifically. Africa for a long time didn't have any serious economic contenders for something like BRICS other than South Africa. Nowadays Nigeria is a closer contender on the continent. And of course you have long histories of South African politicians having spent their time in exile during Apartheid in places where they learned to call each other "comrade" even to this day in their political parties. It's not an out of the blue arrangement. Brazil as far as I'm aware seems to be by far the most economically active in South America too? India seems like third fiddle to Russia & China in this arrangement as a large economy in Asia.
_fizz_buzz_ 2y ago
The Euro is already a reserve currency and makes up about 20% of worldwide reserves. Which is of course not as much as the dollar which is about 60%, but these numbers could of course shift.
- matt-p 2y ago
  So is the Yen, Pound and swiss Franc - many currencies are. What's your point? Pound is about 5% if I remember correctly, which is a higher weighting than the Euro for trade:reserve holding ratio.
jabl 2y ago
Perhaps we should dust off Keynes' Bancor proposal? :) https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor
- iszomer 2y ago
  Wasn't an implementation of Bancor attempted on Ethereum?

by matt-p 2y ago

kragen 2y ago

BRICS has been proposing a sort of basket mechanism. Bitcoin is not yet thickly enough capitalized. The historical standard was gold for 3000 years, and that's what backed the dollar until that was "temporarily suspended" in 01971. That's the default.

helloooooooo 2y ago

IMF does have Speecial Drawing Rights that kind of, but not really, acts as a global currency

gizmo 2y ago

The new reserve currency won't be a single country's currency but a basket of currencies, where the ratio contribution of component currencies gets adjusted every once in a while.

matt-p 2y ago
Ok and who will administer the basket? I'm not saying it's impossible just a bit impractical perhaps.
- rongrobert 2y ago
  It is just economically clueless people talking nonsense. Whatever basket we come up with has all the same properties that cause the Euro to not displace USD but worse. Much worse.
  - matt-p 2y ago
    Indeed.

popol12 2y ago

Bitcoin would be the most fair choice for a new reserve currency. It has equivalent properties as gold but is more practical to use, and there's no geographic inequality to mining it. No government could benefit from manipulating it. How cool is that ?

api 2y ago
It’s more deflationary than gold due to hard fixed supply plus breakage.
rongrobert 2y ago
Of course a middle school level view of currency is "cool".
- popol12 2y ago
  Strong argument you're making here, thanks mate
viraptor 2y ago
> there's no geographic inequality to mining it. Apart from having access to cheap energy which is collocated with... specific geographic features like geothermal / hydro energy which not all countries have access to.
- popol12 2y ago
  Okay, it's not perfect equality but it is way, way more equitable than geographic features like "gold mine in your backyard"
tootie 2y ago
Is Bitcoin even a currency? Who spends it? And who keeps it stable?
- mkoubaa 2y ago
  It's a reserve. The coupling of reserve and currency is a historical accident, not a fundamental reality

jmyeet 2y ago

The Chinese yuan is not a viable reserve currency. Why? Because it's pegged to a basket of other currencies. It should really inflate in value but Chinese government policy is to undervalue it to aid exports. Exports are ~20% of China's economy. It would devastate the economy if the yuan was allowed to freely float, or at least float with the level of central bank management that other developed nations' fiat currencies have. China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that. So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military. You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency. It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.

sidewndr46 2y ago
pretty much every source in the world disagrees with the idea that China doesn't have a retirement system https://www.cfr.org/blog/what-chinese-pension-system-and-why-are-its-problems-hard-fix#:~:text=The%20benefits%20of%20China's%20Old,determined%20by%20individual%20pay%2Din. https://www.cfr.org/blog/what-chinese-pension-system-and-why...
TheCapeGreek 2y ago
>It's just a group of randomly selected countries meant to sound nice Source? Pretty sure BRICS is comprised of the largest regional economies that specifically aren't in the first world, that make for useful alliances for Russia & China specifically. Africa for a long time didn't have any serious economic contenders for something like BRICS other than South Africa. Nowadays Nigeria is a closer contender on the continent. And of course you have long histories of South African politicians having spent their time in exile during Apartheid in places where they learned to call each other "comrade" even to this day in their political parties. It's not an out of the blue arrangement. Brazil as far as I'm aware seems to be by far the most economically active in South America too? India seems like third fiddle to Russia & China in this arrangement as a large economy in Asia.

_fizz_buzz_ 2y ago

The Euro is already a reserve currency and makes up about 20% of worldwide reserves. Which is of course not as much as the dollar which is about 60%, but these numbers could of course shift.

matt-p 2y ago
So is the Yen, Pound and swiss Franc - many currencies are. What's your point? Pound is about 5% if I remember correctly, which is a higher weighting than the Euro for trade:reserve holding ratio.

jabl 2y ago

Perhaps we should dust off Keynes' Bancor proposal? :) https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor

iszomer 2y ago
Wasn't an implementation of Bancor attempted on Ethereum?