In a recent op-ed, Gita Gopinath, the IMF’s chief economist, posited that “digital currencies will not displace the dominant dollar.” In particular, the dollar’s status is supported by the “institutions, rule of law, and credible investor protection” that the United States provides. She also expressed her view that a synthetic hegemonic currency—a digital basket of reserve currencies recently proposed by outgoing Bank of England governor Mark Carney—faces steep obstacles to implementation. While the world would benefit from a greater role for the euro and the renminbi, Gopinath suggests that their institutions require greater development. Instead, the US may be developing an advantage in making the dollar the dominant digital currency through its efforts to combat money laundering and terrorism.

Gopinath’s remarks follow recent discussions by central bankers in the United States and Europe on the topic of stablecoins. First, Fed governor Lael Brainard delivered a speech on December 18, 2019, entitled “Update on Digital Currencies, Stablecoins, and the Challenges Ahead.” Separately, in a letter dated December 19, 2019, Christine Lagarde, president of the European Central Bank, also addressed various issues relating to stablecoins in reply to an inquiry by members of the European Parliament. Both Brainard and Lagarde highlighted the shortcomings of privately issued stablecoins and advocated for a greater role on the part of governments and central banks.