Raoul Pal @RaoulGMI Founder/CEO - Global Macro Investor and Real Vision Group, Business Cycle Economist, Investment Strategist, Economic Historian, Traveller and Rum Drinker.. Jun. 23, 2019 1 min read

Regardless of the final success of Libra, the true challenge to centralized fiat currencies has now started. Thinking of a crypto as a basket of all major currencies essentially anchors its value, depending on the allocation within the basket (the tricky bit). It could be

thought of as a stable coin vs all currencies. Thus it’s nature it more similar to Gold, which performs a similar task. It rises in value if global central banks print too much. It should not fluctuate massively. Surely a basket of all currencies (major ones) including the USD

should net out most movements except maybe driven by productivity growth, deflation and inflation. In a world where this global currency exits, individual central banks lose control over their ability to use FX as a policy tool except versus the basket.

There is a lot to think through here and I’m just thinking aloud ( I’ll write a full GMI article on it next weekend). But I note everyone’s cynicism and it was my go-to emotion but on reflection, this was the first big shot as defining a much larger future financial system

A system that bitcoin opened our minds to as the world rushes towards the digitization all all assets and all transactions and the digital worlds are inseparable from the analogue world. A world where currencies are both state, global, tribal (businesses, games) and decentralized

It’s big. It’s a whole new world of possible futures that is becoming more probable by the day.

In the specifics of the Facebook solution, massive potentially multi-trillion treasury function essentially creates a private central bank, which creates more complexity and possible fragility.

But in the end, this may or may not work on this occasion but the genie is out of the bottle. Everything has probably changed and the digitization of the world has begun to accelerate...


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