Nouriel "Dr. Doom" Roubini appears to be turning to cryptocurrency, at least in a roundabout way, after years of building a reputation as one of the industry's most critical, skeptical and weary observers.
Bloomberg reported Monday that the economist, known for his pessimistic views, is working with a Dubai-based financial firm, Atlas Capital, which is reportedly hiring Web 3 firm Mysten Labs to build the United Sovereign Governance Gold Optimized Dollar, or "USG."
Needless to say, most of this project is still in the "idea" phase, and the details are still being worked out and likely subject to change. But the general outline is: Roubini, arch crypto-critic, will help develop a "more resilient dollar" backed by real assets like U.S. government bonds, gold and real estate investment trusts.
That's not all. The digital asset is expected to be inflation resistant and bring a broader group of people into high finance - and perhaps eventually, if things go well, act as a global reserve currency.
We here at CoinDesk welcome financial innovation, risk takers, and those willing to put ideas into practice. We especially commend those who are trying to solve the myriad problems of the post-industrial, ultra-financialized economy.
So as a sign of respect, we say go for it, see what happens, why not? If Roubini wants to tackle the problems instead of looking for culprits, go for it.
Attentive observers might notice that the United Sovereign Governance Gold Optimized Dollar is similar to another project seeking global reserve status to help underserved communities: Libra! Facebook's Libra!
Libra, you may recall, was the first iteration of a Facebook-backed crypto project that sought to be the "Bank of the Unbanked." It would have been a digital coin backed by a basket of fiat currencies, Treasury bills and other financial instruments. (Mysten was founded by former Meta Platforms. - formerly Facebook - engineers.)
The project never took off, in part because Facebook blew its reputation by selling our data and potentially destabilizing democracy. So regulators around the world acted on our behalf, saying that Facebook - with its billions of users and its entrenchment on the Internet - could not be trusted with a radical new attempt at currency creation.
Roubini's project is similarly ambitious - he wants to create an alternative safe haven to U.S. Treasury securities that also has "payment functions." It could also offer a yield that makes it more attractive to hold, although Roubini points out in a blog post that USG's fluctuating value could limit its use as a means of payment.
Roubini and others cite several risks to greenback hegemony in this blog: Inflation, devaluation of the dollar, the growing influence of China, and the so-called Triffin dilemma related to the U.S. debt burden (or "twin deficits in the fiscal and current accounts").
Still, the USG would not necessarily compete with the dollar and could complement a central bank digital currency (CBDC), Roubini suggested.
Indeed, the world is changing and the economy is getting ... stranger. Cryptocurrency is both a source of this changing environment and home to a number of people who want to fix what's broken. Crypto is not an academy, but rather a source of a lot of ideas. And a lot of potential solutions.
The beauty of the industry is not that it pretends to know the answers, but that it is willing to experiment. Not all will prove successful, but if we keep an open mind, we may learn something.
This weekend, for example, an incredibly popular and risky "algorithmic stablecoin" called UST lost its peg to the U.S. dollar after a number of investors sold and significant amounts were withdrawn from decentralized finance (DeFi) liquidity pools. This decoupling may have doomed UST, which relies on arbitrage opportunities with another cryptocurrency, Luna, to maintain its peg to the U.S. dollar, especially because no algo stablecoin has worked, at least so far.
UST's main backer, a man named Do Kwon, also says his motivation is to fix the flaws in the financial system and expand the range of financial options available to people. That may be a noble aspiration. He could be lying or wrong. But if Roubini is to be believed, we're all still figuring it out.