Bank of England Governor Mark Carney says trade war hurts confidence

Bank of England Governor Mark Carney said the world's reliance on the U.S. dollar as a reserve currency is too risky and proposed a new digital currency to replace it.

"In a multi-polar world, you need a multi-polar currency," he told CNBC's Steve Liesman at the Federal Reserve's annual conference in Jackson Hole, Wyo.

Carney said a new digital currency based on a global basket of goods would provide equilibrium to a system where some countries have moved to zero or negative interest rates, while others, including the U.S., remain positive.

"The question is how do you get there," he said. "You don't just jump to something new over night."

Carney also said the trade war is dampening business confidence around the world. Disruptions in supply chains in the auto, steel and technology sectors, for instance, and taking their toll even among nations that are not directly involved.

"Those effects are impacting all of the economies around the world," he said. "Whether you're directly involved or not it's impinging on the outlook.

Carney, a banker and economist, was once thought to be the next head of the International Monetary Fund, but he didn't get the required backing from European governments. He has headed England's central bank since July 2013.

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