CBDC - Struggle To Protect Central Banks And Fiat System
Push for CBDC (Central Bank Digital Currency) by IMF and Friends got a lot more serious. Ever since El Salvador announced their intent to adopt bitcoin as legal tender and then actually did it, voices for central banks like IMF, World Bank and many others have criticized the move and went on full attack mode. We have heard about CBDC efforts by various countries and praise for it by IMF and friends many times. However, the latest move by IMF is even more significant, in my opinion and can serve as evidence that they are really worried about the possibility of bitcoin and other crypto technologies replacing fiat in the future and making central banks obsolete.
I know, at this time, it is not easy to imagine a world without central banks and fiat currencies. But changes come quick, time moves fast, newer and better technologies replaces older technology, and the world changes. There was a time when most of the world, most of Europe was ruled by monarchs. But then absolute monarchies were no more. So in way, we can view central banks and their associates fighting to preserve status quo of global financial systems amid growing adoption and development of alternative technologies, as absolute monarchies trying to hold on to their power.
A week ago IMF published a very detailed study titles Behind the Scenes of Central Bank Digital Currency: Emerging Trends, Insights, and Policy Lessons. Feel free to go to the IMF website to download the full study and read yourself. It almost seems like a whitepaper or a guide for countries to transition to CBDC. Since this publication was announced, you may have seen news reports praising CBDC and how great the design is. It seems like they are trying to use the same buzz concepts like design, technology, proving services for unbanked that are used by crypto projects. It is an interesting read and reveals that CBDC globally is inevitable. However, your time will probably we better spent if you read the bitcoin whitepaper instead.
While this study was released, almost at the same time there was news report of Fitch Ratings slashed El Salvador's credit default rating from B- to CCC. I don't really pay too much attention or care about this so called rating companies, since they are part of the same system and often not trustworthy. That just shows they are not quite done attacking El Salvador and would love to see them fail. Any decent organization with good intends, I think would respect the choices countries make independently and support them. That would goes against their interest, and maybe that's why we will continue El Salvador's bitcoin journey being attacked by these entities.
El Salvador has been courageous in their move to bitcoin and we will probably see more countries. According to IMF's study, looks like they have their CBDC example as well - Bahamas. Throughout the study they keep mentioning Bahamas as an example of a country that have circulating CBDC. They also mention CBDC in China and Eastern Caribbean Currency Union as having circulating CBDC. But the emphasis on Bahamas and its Sand Dollars is clear. The Bahamas does not currently allow the Sand Dollars to be used outside its borders.
One of the goals they demonstrate CBDC can provide is monetary sovereignty. The study asserts people's choice to accept other digital currencies or stablecoins may present risks for countries. It appears to me as if they want countries to create CBDC because digital currencies is the future, and providing this solution countries may easily ban non-sovereign currencies if they see them as risks. Of course, they would be want to keep their monetary sovereignty. But reality is all of these countries that are not world reserve currency don't really have monetary sovereignty. That's why it is so easy to punish uncooperative countries with sanctions.
Two design features of CBDC they were considering caught my attentions. They are anonymity and off-line capacity. These are interesting features for a digital currency to have, but how could they achieve that. When speaking about anonymity, it became clear really quick that they aren't really in favor of it due to a potential to be used for illicit purposes. However, they suggest a tiered system where some sort of anonymity might be possible.
Ability to transact off-line would be great. I was hoping maybe there is some progress here. There was just too much talk about how there are various solutions but none of them really work. lol.
The Bahamas considers off-line functionality to be vitally important but has encountered difficulties in achieving it. The pilot revealed that the planned solution of local off-line networks—built on introducing local redundancies to the main telecommunication system—did not fully achieve the policy goal.
and
The team working on the Swedish e-krona proof of concept has identified a number of potential solutions to establish offline functionality and is proceeding to test these. Participants have identified several challenges, such as how to prevent double spending and ensure the authenticity of e-kronas while off-line.
At least it is great they are experimenting with different technologies and solutions to achieve their CBDC goals. Regardless all of these attempts, any design they come up with will never be complete without a core design component that is decentralization. If they bought into this idea there would be no need for CBDC in the first place I guess. It is not really about solutions, but keeping the power to control the money.
One change is so obvious or perhaps another deception tactic is that they are present the future of money as a technology, they even call it solutions used for CBDC as centralized technology. Great deal of emphasis is done in presenting this material a great design. My skeptical mind such efforts is only impressed how they designed this sophisticated piece of information to only confuse people and present that this no different then promise of digital money that bitcoin and crypto world offers.
All I see is the evidence that central bankers are taking bitcoin and alternative financial solutions as a real threat to the status quo, and CBDC seems to be their solution. Except, CBDC doesn't offer anything new. They probably will just save some trees and print less paper money, but the core issue will remain the same. Without hard cap on the inflation, without backing the created money with something of real value, it will be all same fiat that keep losing its value over time.
They may not have technology on their side. But they do have a lot of resources, power and authority behind these efforts. For that reason CBDS probably will continue growing in implementation throughout the world. I am not completely against it either. I just want to see a fair competition with decentralized solutions we have. Let people choose.
Posted Using LeoFinance Beta
I feel the crypto blockchain will forever be a threat to the fiat generals. However there is almost nothing they can do about it which means that decentralization will eventually gradually take over. This will do more good than harm so I'm never against it.
Yes, decentralization is inevitable it seems.
I believe crypto is here to stay and nothing is stopping it from progressing from how it has started to make positive impact around the world
Anything that throws off the shackles of oppression and encourages human beings to be empowered will always be at odds with the centralized banking system.
However if it wasn't for that system there wouldn't be such an opportunity for financial freedom that currently exists for us right now.
We may not like it however we definitely need to respect the fact that this system gave us the opportunity to create blockchain systems and technologies as well as an entire ecosystem.
And of course since we are such a great threat to them, when will all of us online start to make their nightmares and fears come true?
Thank you very much for your amazing post and you are completely correct.
And my puppy dog says thank you very much for your amazing post and excellent content!
I'm not against CBDCs either... if they reduce friction for businesses for payments and settlements then absolutely. It still takes so long to transfer money between international banks.
I do think that blockchains will essentially become nation states themselves though. How long will it be before Hive offers everything a nation state does? We have fast transactions, we have governance, we have financial stability, we have people living off this economy, we have yield... and I'm sure it won't be too long before people can pay their groceries and rent with their Hive earnings. I can already do that with crypto.com (they just don't have Hive yet).
Definitely agree with you that blockchains will eventually become nation states.
The issue that worries me about Hive is that I don't hear it being mentioned anywhere, on the other hand, I read and hear news and articles from yahoo mentioning about Solana, Mana, BTC, ETH and a bunch of other useless coins all the time. But Hive ? Never any mention of Hive nor Hive Engine at all.
Maybe this is a coordinated attack of the cryptos against the fiats where Hive will be "THE" real blockchain, whereas these other other currencies without any use at all are only for distraction and diversion targeted at the countries that are trying to keep fiats alive.
Moreover, the SWIFT system is the first I would like to see taken down for good.
I think it will be asking too much for a blockchain network to offer what nation states offer. However, these systems can make services offered by nation states more transparent, efficient, and effective.
Nobody is surprised by this because the existing legacy financial system wants to maintain their control. I think they want to have the control China has but it's obviously not the best choice. I personally think CBDC won't really change anything but I hope it gets delayed so crypto has more time to develop.
Posted Using LeoFinance Beta
I agree, it is all about power. I don't think the speed of CBDC implementation will help or hurt bitcoin and crypto.
World changes, therefore financial systems change as well. There was no IMF before Bretton Woods. What they fear is that the central banks, and the FED won't be the only monetary boards in the world anymore. This will have an impact on the major fiats like USD and EUR.
I think the multiple efforts being put in place for a digital currency controlled by the government is driven by fear.
Fear that the current system of payment using fiat currency is fast becoming obsolete.
They want to be able to compete in the digital future that is now really inevitable.
Isn't the door of financial inclusion already open in crypto space? And once those who are willing to learn this technology become successful through the years, will not this technology help solve people's economic problems? I don't know, considering the historical track record of the IMF, I really doubt if financial inclusion and poverty reduction are their real goals. These goals are only good to read as policies in official paper, but it's a big question mark when it comes to implementation.
Posted Using LeoFinance Beta
That was my reaction too. I agree crypto already does that in many forms.
This is another of the many world wars that have occurred and will continue to occur. Mars (the warrior) is alive and kicking as we say in my country. A virtual hug.
I think the IMF knows very well that the rise and adoption of cryptocurrencies have a huge potential to displace and overshadow currencies such as CBDCs and therefore, the IMF itself.The rise of decentralized platforms and applications prove it[1]. And the case of El Salvador is a strong initiative to detach itself from the IMF's "virtuous designs". Currently, 190 countries are members of the IMF [2]. I wonder, what will happen to the IMF if progressively the member countries will adopt similar initiatives like El Salvador's? in my opinion, it would be the end of a new beginning of a decentralized financial system managed by digital communities.
Many countries are watching El Salvador experiment closely. I have no doubt it will not the only country with bitcoin as legal tender in the near future.
I agree with you. And if El Salvador substantially improves its economy by adopting bitcoin, it will be a magnificent example for other nations to consider.A software application that uses parameters and economic consensus different from the IMF and the World Bank.
This post has been manually curated by @bhattg from Indiaunited community. Join us on our Discord Server.
Do you know that you can earn a passive income by delegating your Leo power to @india-leo account? We share 100 % of the curation rewards with the delegators.
Please contribute to the community by upvoting this comment and posts made by @indiaunited.
Your content has been voted as a part of Encouragement program. Keep up the good work!
Use Ecency daily to boost your growth on platform!
Support Ecency
Vote for new Proposal
Delegate HP and earn more
hmmm... Did you forget to bring HIVE here, as HBD is a decentralised stable coin?, bot pegged to USD in a hard way but has mechanisms to maintain dollar peg through HIVE -> HBD stability exchange mechanism.
This has potential ofcourse as Terra USD is leading decentralised stable coin, but its kind of centralised too...as its maintainance of peg is controlled by activities of a entity.
That would have been relevant to put out here.
Now, I see some colliding things here - El Salvador.
I am kind of not happy with the legal tender move because of president Bueke's dictatorship credentials... he seems to be a dictator of sorts and perhapes wants BTC to free himself from sanctions of US dollars. Bueke's has a history of doing currupt things and arbitary things so his embrace of BTC does not look right to me.
So many articles in decrypt, and others saying that BTC buying and keeping as reserves can effect the repayment capacity of El Salvador's treasury.
Somehow, I don't see details of transacction that Bukele conducted with things like transaction hash and stuff... its not right.
Deails should be transparen because Btc is a public blockchain right, and he is buying for the entire nation. And in one tweet which I did not understand, it looks like he mentions he buying BTC for the country through his phone.
What nonsense is that!! Plus those CHivo wallet, people are losing funds there, its security is not well documented, something like that.
Alsi Bukele has brought BTC which there is no disclosure of other than his tweets - when its price was higher - 50,000, 40,000 like that... and you know prices have fallen, ths eans for now, El Salvador's treasury has lost money that's invested in Bitcoin.
This is worrying.
this is the issue...no transperancy. No one advises you to maintain all your money in BTC, some in fiat, some in gold, some in other cryptos, stocks , good diversification.
this guy made BITcoin legal tender, and it looks like he controld buying and holding of bitcoin. No details of whose control the keys are etc...
No I don't think BTC in El Salvador with Bukele overseeing all that is any good. Sorry I don't trust that guy.
Besides this those Bitcoin bonds... question is agreed Bitcoin is long term going to create wealth but short term price is uncertain. This guys purchase patterns look impulsive that he brought so much BTC at high range of 50,000$ instead of buying dips... so if price of BTC falls more, don't you think it can collapse El Salvadors economy?
I think it can... if I was a poor Salvadorian I will be worried ...anyway.
IMF was explaining that, and that made sense.
I am not a tall for them advising El Salvador to reserve that BTC legal tender decision etc, but I am skeptical of Buekele's intensions on what he will do will BTC...he seems to be a currupt dictator. That's ok, I have the most villanic Prime Minister in my country India, but still, honestly BTC doing good to Salvadorians is doubthful in hads of Bukele's that can't be his intension for sure!!
Hive and HBD are special. I write a lot about them already and usually keep those topics separate. But you are right HBD as a stable coin and Hive as a decentralized network have solutions for many of the monetary issues.
I don't know much about Bukele himself or politics in El Salvador. It is possible he may have authoritarian elements. But I haven't studied this subject to know that as a fact.
I would assume they would have some legal system in place as far as who controls the keys for the purchased bitcoin. Bukele or the government doesn't control Chivo wallet. If there are any issues with that, probably not their direct fault.
This was a big move and big changes like this always have its challenges. I hope they will be successful in this journey.
Technology and cryto will continue to help and there is no stoppage it .it has a lot of positive impact.
This CBDC they are the one that's causing problem in El Salvador Now. They are the one gathering the protesters against BTC.
Posted Using LeoFinance Beta
yay, sounds good to me. I wouldn't miss fiat much. and save some trees! :) letting the people choose is always the best way..
Nothing can change 6he style of crypto currency because it has come to stay which I believe that some countries governments will take it as a medium of there exchange in the nearest future
Even one of the holy books says that you don't out new wine in old skin. The fiat (central) banks really see crypto as a threat to their continuous existence. But I'd advise they look for the way forward - a way by which they could harmonize their co-existence with digital currency.
Such interesting post!, I think banks and financials institutions needs to get update and adopt crypto. I believe in a world that crypto and fiat works as well, because there are many blind zones in the world, I mean, sometimes we thought internet is everywhere, but there are many countries with low access or any access. So, great things bring great changes, and it's just evolution. Banks didn't want digital money in the past, and today everyone has a debit-credit card.
The concerns financial institutions have majorly borders around control. The decentralised nature of cryptocurrency distributes the control over too many hands. Value (money) would move at an unprecedented rate.
Even the CBDS would more likely just be an overlooking body rather than a control body like Central Banks. Or else, it would defeat the purpose of decentralisation.