Giving the Dollar a Decentralized Makeover
|By Jurica Dujmovic|
If you were at the helm of the Federal Reserve and had the power to control and manage the U.S. monetary system, what would you do?
Would you stick to the same old failing formula, or would you attempt to fix what is broken?
In this exclusive interview, Stefan Rust — visionary CEO of independent data aggregator Truflation — shares his ambitious ideas for transforming the U.S. dollar.
With a dash of blockchain, a sprinkle of smart contracts and a generous helping of transparent governance, Rust paints a bold picture of a stronger, more resilient currency ready to take on the challenges of an ever-evolving global economy.
First, Rust calls for a transparent mechanism that determines when dollars are printed or extracted from the market — such as quantitative easing and quantitative tightening — to allow for a continuous, steady emission and redemption of currency.
He highlights the fact that while USD is the most dominant currency globally, its governance lacks transparency and consideration for other economies that rely on the dollar.
To address this issue, Rust proposes moving the governance of the U.S. dollar into smart contracts. By utilizing blockchain technology, these smart contracts would control the release and extraction of funds in the market based on input from various decentralized, autonomous oracle services.
External factors such as outstanding loans in USD to specific countries would also be considered.
Additionally, Rust sees no negatives in stablecoins being USD-denominated. In fact, he suggests that the Fed should incentivize and support them.
As stablecoins are pegged to the U.S. dollar, they help accelerate its adoption in the digital realm — a growing $1.2 trillion marketplace where the U.S. government, institutions and banks currently have little understanding or presence.
Although crypto is a small part of the financial ecosystem right now, it continues to grow at a rapid pace. So, Rust believes the U.S. dollar's strong presence in this space should be seen as an opportunity rather than a threat.
On top of a new, transparent governance model for the USD, Rust envisions a system that enables digital currencies to be built off the back of the USD. This would extend its capabilities and distribution across the globe.
He emphasizes the importance of being open to competition, as it would drive innovation, provide liquidity, facilitate trade and ensure the utility of the U.S. dollar in both the digital and fiat realms.
Overall, Rust's proposed revamp of the U.S. dollar presents a compelling fusion of traditional finance and innovative cryptocurrency technologies that could strengthen the USD and pave the way for a more resilient and dynamic global economy.
However, we cannot overlook the fact that the Fed and the existing banking system have long been stuck in their ways. They are often resistant to the adoption of decentralized financial systems.
The imminent arrival of central bank digital currencies seems to be a testament to this resistance. While CBDCs may embrace some aspects of digital currency, they are poised to further solidify central banks' control and financial authoritarianism rather than promote economic freedom and personal autonomy.
As Rust put it himself, "At the moment, the Federal Reserve consists of a number of regional U.S. federal reserves, all of which are overseen by technophobes and protectionists that are driven largely by a desire to control and dominate the global economy from behind closed doors."
Although it is unlikely that Rust's vision of a reworked dollar will come to fruition any time soon, we can still hope that in time, the merits of the broader crypto movement will be acknowledged.
Slowly but surely, as crypto gains more traction, the global financial landscape can evolve in a direction that empowers individuals by fostering economic freedom.