Bitcoin, Argentina, the IMF XDR & the Triffen Dilemma

“The Triffin dilemma or Triffin paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was identified in the 1960s by Belgian-American economist Robert Triffin, who pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, leading to a trade deficit.

The use of a national currency, such as the U.S. dollar, as global reserve currency leads to tension between its national and global monetary policy. This is reflected in fundamental imbalances in the balance of payments on the current account, as some goals require an outflow of dollars from the United States, while others require an inflow.

The Triffin dilemma is usually cited to articulate the problems with the role of the U.S. dollar as the reserve currency under the Bretton Woods system. John Maynard Keynes had anticipated this difficulty and had advocated the use of a global reserve currency called 'Bancor'. Currently, the IMF's SDRs are the closest thing to the proposed Bancor but they have not been adopted widely enough to replace the dollar as the global reserve currency.

In the wake of the financial crisis of 2007–2008, the governor of the People's Bank of China named the reserve currency status of the US dollar as a contributing factor to global savings and investment imbalances that led to the crisis. As such, the Triffin Dilemma is related to the Global Savings Glut hypothesis because the dollar's reserve currency role exacerbates the U.S. current account deficit due to heightened demand for dollars.”


Bitcoin is a threat to the IMF's XDR:

“LONDON, Feb 23 (Reuters) – The International Monetary Fund has laid out a nine-point action plan for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies such as bitcoin legal tender status.”


7 thoughts on “Bitcoin, Argentina, the IMF XDR & the Triffen Dilemma”

  1. Just slap “Bitcoin” somewhere in the headline, then talk about whatever.

    Post to r/Bitcoin for extra points.

  2. Didn’t know we were relevant enough to warrant an article. Good to know we can be used as a bad example.

  3. Takeaway was the US is paying a (hefty) cost to hosting the world’s reserve currency; if the IMF presumed a move to a Bancor system made them the aire apparent, it would explain their hostility towards Bitcoin.

    Argentina is a just an interesting and very recent example of the system fraying a bit.

  4. Joining Iran, Russia, Brazil and soon, Saudi Arabia.

    The Chinese CBDC Yuan (DCEP) challenge to the USD global hegemony is rapidly building.

    USD vs DCEP vs BTC

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