Travis Patron is the founder of Diginomics , a bitcoin news organization where professionals can earn their bitcoin certification . Here he explains why the stateless nature of bitcoin holds the potential to solve an age-old international monetary flaw. Although the United States Federal Reserve Note carries with it many advantages for conducting commerce and serving as a world reserve currency, its makeup is not void of imperfections. One of the main shortcomings of the US dollar is the Triffin dilemma , a problem which arises when countries must manage both short term domestic and long term international economic objectives.
Such a dilemma can lead to trade deficits when a country must also satisfy international demand of its currency.
Where the dollar falls victim to the Triffin dilemma, however, the stateless characteristics of bitcoin may hold promise to solve this international monetary flaw, and provide the backbone for a more interdependent global economy. The Triffin dilemma
The economist Robert Triffin first brought to light an international monetary issue involving the nation holding reserve currency status and the impact such a role would have on domestic trade deficits.
Such a currency arrangement is usually cited to articulate the problems with the role of the dollar as the reserve currency under the Bretton Woods system.
The countries issuing a reserve currency, which foreign nations would wish to hold, must be willing to supply extra money stock to fulfill global demand. Such an arrangement would inevitably lead to operating a trade deficit.
In March of 2009, in the midst of the recent Great Recession, the People’s Bank of China Governor Zhou Xiaochuan voiced his displeasure of the current makeup of the world reserve currency.
Known for his reformist tendencies, Xiaochuan made clear the need for creating "an international reserve currency that is disconnected from individual nations". Such an […]
