^[2] See Bergsten, F. (1997), “The dollar and the euro”, Foreign Affairs , Vol. 76, No 4, pp. 83-95.

^[3] The United States accounts for about 11% of global trade, compared with 14% for the euro area.

^[4] For an overview of the international role of the US dollar, see, for example: Goldberg, L. and Lerman, R. (2019), “The U.S. dollar’s global roles: where do things stand?”, Liberty Street Economics , Federal Reserve Bank of New York. Although China has become the world’s second largest economy, the international use of its currency is still in its infancy. The renminbi is currently the fifth most used unit in international payments, behind the Japanese yen and the pound sterling; see SWIFT (2019), RMB tracker – Monthly statistics and reporting on renminbi progress towards becoming an international currency , July 2019.

^[5] See e.g. Tavlas, G., and Y. Ozeki (1991), “The Japanese yen as an international currency”, IMF Working Paper , No. 91/2.

^[6] See Bank for International Settlements (2019), Triennial central bank survey. Foreign exchange turnover in April 2019 , 16 September.

^[7] See Gopinath, G. (2015), “The international price system”, Working Paper Series , No 21646, National Bureau of Economic Research.

^[8] For instance, around one-third (GDP-weighted) of countries worldwide used the US dollar as an exchange rate anchor in 1970, compared with nearly one-half in 2015 (see Ilzetzki, E., Reinhart, C. and Rogoff, K. (2019), “Exchange arrangements entering the twenty-first century: which anchor will hold?”, The Quarterly Journal of Economics , Vol. 134, No 2, pp. 599-646). In addition, about two-thirds of official foreign exchange reserves are invested in the US dollar.

^[9] For more details on “stablecoin” initiatives, see e.g. Bullmann, D., J. Klemm and A. Pinna (2019), “In search of stability in crypto-assets: are stablecoins the solution?”, ECB Occasional Paper Series , No 230.

^[10] Facebook defines a monthly active user as a user who has logged in and visited Facebook through its website, a mobile device or its Messenger application in the last 30 days as of the date of measurement (see Facebook’s 2019 Q2 report, available at https://investor.fb.com/financials/default.aspx).

^[11] Data on monthly users retrieved from statista.com (on 15 August 2019). There is overlap between Facebook’s family of products; an estimated 2.7 billion users use Facebook, Instagram, WhatsApp or Messenger each month.

^[12] See Cœuré, B. (2019), “Update from the Chair of the G7 working group on stablecoins”, update to the G7 Finance Ministers and Central Bank Governors Meeting 17-18 July 2019, Chantilly, France.

^[13] See Ministère de l’économie et des finances and Bundesministerium der Finanzen (2019), “Joint statement on Libra”, Helsinki, 13 Septembre 2019.

^[14] See Cœuré, B. (2019), “The euro’s global role in a changing world: a monetary policy perspective”, speech at the Council on Foreign Relations, New York City, 15 February 2019.

^[15] See e.g. Maggiori, M., Neiman, B. and Schreger, J. (2019), “The rise of the dollar and fall of the euro as international currencies”, AEA Papers and Proceedings , Vol. 109, American Economic Association, pp. 521-526.

^[16] See, for example, Krugman, P. (1984), “The international role of the dollar: theory and prospect”, Exchange Rate Theory and Practice , National Bureau of Economic Research, University of Chicago Press, pp. 261-278.

^[17] For historical evidence see Eichengreen, B., Mehl, A. and Chiţu, L. (2017), How global currencies work – Past, present and future , Princeton University Press. Moreover, Gita Gopinath and Jeremy Stein provide a unified theory for why a currency may be used dominantly in global trade and finance, where its role as an invoicing unit of international trade transactions is complementary to its role as a safe store of value; Gopinath, G. and J. Stein (2018), “Banking, trade, and the making of a dominant currency”, NBER Working Paper , No. 24485.

^[18] See Bindseil, U. (2018), “Pre-1800 central bank operations and the origins of central banking”, mimeo.

^[19] See also Portes, R. and Rey, H. (1998), “The emergence of the euro as an international currency”, Economic Policy, Vol. 13, No 26, pp. 307-343.

^[20] According to a seminal study by Robert Triffin, it took between 30 and 70 years for the US dollar to overtake the pound sterling as the dominant international currency (see Triffin, R. (1960), Gold and the dollar crisis: the future of convertibility , Yale University Press: New Haven). More recent studies have challenged that view and suggest that the transition from the pound sterling to the US dollar was much faster (see, for example, Chiţu, L., Eichengreen, B. and Mehl, A. (2014), “When did the dollar overtake sterling as the leading international currency? Evidence from the bond markets,” Journal of Development Economics , Vol. 111(C), pp. 225-245).

^[21] See, for example, Calvo, G. (2002), “On dollarization”, The Economics of Transition , Vol. 10, No 2, pp. 393-403.

^[22] See Committee on Payments and Market Infrastructures (2018), Cross-border retail payments , Bank for International Settlements, Basel. Data on tourism flows (international tourist arrivals by world region) are from the United Nations World Tourism Organization; those on internet and mobile phone users are from the International Telecommunication Union and the World Bank; and data on global remittances are from the World Bank. There are no direct data on cross-border e-commerce activity, but parcel volume in this area (as measured by the Universal Postal Union) is considered to be a reasonable proxy.

^[23] See Rolfe, A. (2019), “Mobile money transactions equivalent of half of Kenya’s GDP”, Payments Cards and Mobile , 25 January.

^[24] This refers to mobile payments for consumption in 2017.

^[25] This includes mobile consumption, mobile finance, personal application and other payments such as telecom recharging.

^[26] See Hayek, F. (1976), Denationalisation of money , Hobart Paper Special, 70, Institute of Economic Affairs, London.

^[27] See Eurostat (2018), “E-commerce statistics for individuals”, Statistics Explained , 20 December 2018.

^[28] See “The economic policy at the heart of Europe is creaking”, The Economist , 16 September 2019.

^[29] For further discussion, see Rogoff, K. (2014), “Costs and benefits to phasing out paper currency”, paper presented at the NBER Macroeconomics Annual Conference, 11 April.

^[30] In reality, current private crypto-assets only allow for pseudo-anonymity, as all transactions are publicly recorded. But users do not necessarily have to reveal their true identities.

^[31] See Financial Action Task Force (2019), “Guidance for a risk-based approach to virtual assets and virtual asset service providers”, June.

^[32] The GDPR (Regulation (EU) 2016/67) governs data protection and privacy for all individual citizens of the EU and the European Economic Area. It was adopted on 14 April 2016 and became enforceable on 25 May 2018. The GDPR also addresses the transfer of personal data outside the EU. One possible implication of this is a race to the top in terms of data protection standards.

^[33] See Cœuré, B. (2018), “The future of financial market infrastructures: spearheading progress without renouncing safety”, speech at the Central Bank Payments Conference, Singapore, 26 June.

^[34] See Cœuré, B. (2019), “Payments for the people”, introductory remarks at the High-Level Meeting on Financial Inclusion, Basel, 27 May.

^[35] See Carney, M. (2019), “The Growing Challenges for Monetary Policy in the current International Monetary and Financial System”, speech given at the Jackson Hole Symposium, 23 August.

^[36] See Barontini, C. and Holden, H. (2019), “Proceeding with caution – a survey on central bank digital currency”, BIS Papers , No 101, Bank for International Settlements, January.

^[37] China sees global leadership in digital payment services as a strategic goal – precisely with the aim of avoiding the future of digital money being dominated by one player in the way that the global monetary and financial system has so far been dominated by one currency. See Chorzempa, M. (2019), “Who Likes Facebook's Libra Currency? Not the Chinese”, Realtime Economic Issues Watch , Peterson Institute for International Economics, 16 July.

^[38] As the late Tommaso Padoa-Schioppa stressed: “Not surprisingly, the final de-linking from gold shifted monetary management away from international constraints toward domestic priorities. Monetary nationalism took over”; see Padoa-Schioppa, T. (2010), “The ghost of Bancor: the economic crisis and global economic disorder”, lecture at the University of Louvain-la-Neuve, 25 February.

^[39] A report was published in March 2018 (see ECB and Bank of Japan (2018), “Securities settlement systems: delivery-versus-payment in a distributed ledger environment”, STELLA - a joint research project of the European Central Bank and the Bank of Japan).

^[40] See Brunnermeier, M., James, H. and Landau, J. P. (2019), “Digital currency areas”, Vox , 3 July.

^[41] So, as they put it, even if the network still uses official fiat currencies as a unit of account and to back the payment instrument, that instrument cannot be used for transactions and exchanges outside the network.

^[42] Gresham's law is a monetary principle stating that “bad money drives out good”. That dollarization is akin to a reversal of Gresham’s law is a long-standing theme in the academic literature; see e.g. Guidotti, P. and C. Rodriguez (1992), “Dollarization in Latin America: Gresham's law in reverse?”, IMF Staff Papers , 39, pp. 518-544.

^[43] For further detail see Adrian, T. and T. Mancini-Griffoli (2019), “The rise of digital money”, IMF Fintech Note, 19/01. Dual or multiple currency systems entail transaction costs for agents which explain why they remain relatively rare (see Engel, C. (2018), “The Implications of Digital Currencies for Monetary Policy and the International Monetary System,” paper presented at the ABFER workshop on digital currency economics and policy, Singapore, 14-18 November 2018.)

^[44] See e.g. Pettis, M. (2019), “Facebook’s Libra: Does the World Need Frictionless Money?”, Carnegie Endowment for International Peace , 27 June 2019. During periods of financial stress, some emerging market and developing economies may see outflows of commercial bank deposits into “stablecoins”. This might reduce domestic financial intermediation, accelerate capital outflows and increase exchange rate volatility.

^[45] And they could increase scarcity of safe assets in the major banking sectors and complicate open market operations, as eligible collateral becomes scarcer. This would be the case provided that flows into global “stablecoins” do not come exclusively from flows out of deposits in those same banking sectors.