Public Participation

Jim Tozzi

Summary

A replacement, if possible, of  the existing dollar based regime with an equitable and reliable cryptocurrency CBDC created and managed by the United States, two other countries and the IMF. The ultimate distribution of the aforementioned cryptocurrency among existing creditors and/or  income classes would be the subject of a notice and comment process. Particular emphasis will be placed on the creation of a network of interconnected technologies which will enable the creation, transfer, and management of digital assets including  cryptocurrencies

The thrust of the proposal is to provide an alternative to the dollar because of its irreversible downward spiral which will be a result of the forthcoming national bankruptcy.

Credentials

The author was the federal  employee involved in the establishment and operation  of   “centralized regulatory review” in the White House Office of  Management and Budget for five Presidential Administrations.

The Proposal

Replace the current U.S.-dollar-based regime with a jointly issued digital currency ( the U.S., two other states, and the International Monetary Fund), including a possible income distribution mechanism established via notice-and-comment. NB

Third-Party Analysis

What is the proposal and the motivation?

• Tozzi suggests that what he calls “the existing dollar-based regime” should — if possible — be replaced by an “equitable and reliable cryptocurrency” issued by the U.S., two other countries, and the IMF. (As part of that, the distribution among existing creditors and/or income classes would be subject to a formal public notice & comment process. ) The Center for Regulatory Effectiveness+1 Editor’s Note: The aforementioned program consists solely of governmental  bodies because any reformative process capable of adoption by the prevailing body politic will not be able to fulfill  the totality of the obligations of the US government thereby creating winners and non-compensated losers who must be so informed by their respective creditor or debtor.
• The underlying motivation is his view that the U.S. fiscal and monetary regime (deficit financing, reliance on the dollar’s reserve status) is reaching serious strain and that a digital/crypto approach could offer a “fallback” or reform path. The Center for Regulatory Effectiveness
• It thus sits at the intersection of two big topics: (1) the international monetary system / reserve currency status of the dollar; and (2) the digital currency / CBDC (central-bank digital currency) / stablecoin discussion.

 What do others think — strengths and challenges

Looking at the broader literature and institutional commentary, here are how key lines of thinking map onto such a proposal.

Strengths / arguments in favour

1. Modernising payment infrastructure
   • The IMF’s “CBDC Virtual Handbook” outlines how central banks worldwide are exploring digital currencies for domestic payments, cross-border flows, inclusion, etc. IMF+1
   • A jointly issued digital currency might improve cross-border settlement efficiency, reduce reliance on one currency (the dollar) in global trade/finance, and potentially reduce some systemic risks of a one-currency-dominant regime (e.g., “exorbitant privilege”).
   • Some analysts (for example Mark Carney) have previously floated the idea of a “synthetic hegemonic currency” or “network of CBDCs” as a successor or alternative to dollar dominance. The Guardian+1
2. Equity / distribution considerations
   • Tozzi’s approach of “distribution among creditors/income classes via notice & comment” touches on the idea that a major currency-system change should involve democratic/public input — something many critiques of the current system say is lacking.
   • Using digital currency infrastructure may enable more fine-grained distribution, programmability, transparency (if well-designed) versus traditional fiat systems.

Challenges / objections / risks

1. Entrenchment of the dollar and inertia

   • The incumbent role of the U.S. dollar is deeply entrenched: trade invoicing, reserves, debt issuance, global finance. For example, one review states that inertia in moving away from a dominant currency is large: change tends to take decades. European Central Bank+1
   • In other words, replacing the dollar‐based regime is possible but likely very slow and complex.

2. Loss of monetary / financial sovereignty

   • A digital currency jointly issued by multiple countries and the IMF raises questions: who sets the rules, how is governance shared, how do national monetary policies interact?
   • The literature on CBDCs warns that cross-border or globally interoperable digital currencies can create risks of currency substitution, loss of domestic policy control, capital flow volatility. Bank for International Settlements+1

3. Technical, governance, operational & legal complexity

   • Building a new digital currency infrastructure is non-trivial: consensus mechanisms, security, privacy, interoperability, regulatory oversight. Tozzi’s own text outlines many steps (blockchain design, pilot, regulator, legislation) The Center for Regulatory Effectiveness
   • Designing a fair distribution mechanism (creditors, income classes) with public notice & comment adds additional layers of social/political complexity.

4. Risks to financial stability / banks / central banks

   • Some research shows that retail CBDCs may alter bank deposit dynamics, central bank balance sheets, profitability, and could even heighten risks of “runs” if poorly designed. For example, a paper shows CBDC may exacerbate bank-runs if unlimited. arXiv+1
   • If a global digital currency displaces national currencies or bank deposits, it could radically shift existing intermediaries and fiscal/monetary frameworks.
5. Geopolitical and institutional coordination hurdles
   • For such a currency to work, instrumental coordination among the U.S., other countries, and the IMF would be essential. Aligning interests (monetary, fiscal, regulatory) across sovereign states is historically very tough.
   • Also, many emerging economies may prefer alternatives to U.S./western-dominated currency systems; a jointly U.S./other/IMF digital currency might still be seen as an extension of existing dominance rather than replacement.

 So — what’s the verdict?

On balance, the proposal is bold and forward-looking, but also ahead of its time. Here’s how one might summarise:

• It addresses a real set of problems: the international monetary system’s heavy reliance on one national currency (the dollar), growing digital/fintech possibilities, and equity/distribution questions.
• It aligns with key trends: central banks exploring CBDCs, cross-border payment innovation, and concern about the longevity of the dollar’s dominance.
• But the practical hurdles are immense: the institutional inertia of the dollar system; the coordination of multiple sovereigns plus the IMF; the legal/technical/regulatory overhaul; the financial stability implications; the governance of distribution.
• For this proposal to be seriously viable, we’d probably need to see a phased approach: pilot issues, regional or multilateral digital currency systems (perhaps with fewer countries at first), strong institutional design on governance, risk-mitigation measures, bank/finance system safeguards.

In short: I view it as an interesting and credible idea in theory — but not something ready for immediate full-scale implementation in the current decade unless significant consensus and infrastructure is built.

Editor’s Note: To this end, failure to begin the process immediately will result in the de facto blessing of deficit financing in perpetuity.  “Rome didn’t fall in a day”