I wanted to take this opportunity to respond more fully to a comment I received on my recent post, "The Potential for Central Bank Digital Currencies to Shape a New Economic World Order."

I received a very thoughtful comment from @taskmaster4450, who is one of the handful of writers here in the STEEM-verse that I respect greatly. His writing is thoughtful and considered. We also share a preference for thinking about cryptoassets with a long-term perspective. Both of us tend to emphasize where we see the space headed 5, 10, 20 years from now, rather than the short-term price movement focused writing you often see throughout the crypto media.

My basic thesis is that central bank digital currencies (CBDC) will likely be much faster, easier to settle, and thus better integrated into modern international trade and e-commerce systems. As a result, they will disrupt the existing global financial system. Probably much faster than anyone thinks.

Thus, I was interested to read @taskmaster4450le's response to my article where he states it could be as soon as 5 years!

Without a doubt, the world is changing quickly. We are seeing countries with options they did not have in the past. The dependence upon the USD is dying quickly. My guess is the dollar as the reserve currency will not be the case in 5 years.

There simply is no reason for countries to stand for it.

What is sad, for Americans (and Brits) is both countries, because of their marriage to the bankers, are falling way behind in the rapidly changing blockchain/crypto landscape.

I feel both are already cooked. They lost the war before it even began.

I honestly think 5 years is a little too soon, but no one really knows how fast we will see CBDC's adopted as they are literally an entirely new digital asset innovation.

Although we can debate about the timing of these things ad infinitem, and it doesn't really matter all that much if you are of the mind that such developments are pretty much inevitable, one aspect that is strikingly obvious to anyone currently paying attention to this topic is that the Federal Reserve is pretty much clueless about cryptocurrency.

To prove my point, I was astounded to see Fed chief Jerome Powell say this a couple weeks ago. While in Switzerland for a panel discussion titled ""The Economic Outlook and Monetary Policy" hosted by the Swiss Institute of International Studies at the University of Zurich there is video of him providing the following quote when asked about the potential for the Fed to pursue CBDC:

I don't think so... Of course, we are following, very carefully, the whole question of digital currencies. It's not something that we're actively considering... For us, it raises significant issues that we want to see carefully resolved.

For example, if you think about one currency that was for United States or a multi-national currency, it would really need to be cyber-secure because, I mean, it's one thing to be able to counterfeit paper currency; it's another thing to be able to hack into a cyber currency and create with a computer however much of it you want.

So, the cyber issues are quite daunting. It's also not clear to us that there's demand for this. Consumers have plenty of payment options. They're not clamoring for this. I don't want to sound like I'm ruling it out... but there's another question too. If people are leaving their money in cyber currency and holding it there, they're not putting it in a bank. What happens with banks is that people deposit their money and banks lend the money out. So, what happens to intermediation process if everyone is just investing in this cyber currency?

So, I would say we are in favor of financial innovation. We're following these things carefully, but we don't see digital currencies from a central bank as something in the near term."

Ah, there's just so much wrong with this statement. At least when they asked him about Libra he used the proper term "stablecoin." Here you have the most powerful central bank in the world poo-pooing on blockchain quite simply because they don't understand it. First off, there is his comment that you can "hack into a cyber currency," when exactly has bitcoin ever been hacked? Go ahead and look. I'll wait.

200 billion reasons to hack the thing and, yet, nobody has done it yet.

There is also Powell's bold admission that

1. the Fed doesn't see any demand for this! (Uh, have you tried sending money from within the United States to another account within the United States recently, sir? It is a huge pain in the ass).
2. the Fed clearly is adopting this policy of ignorance to protect their beloved banks.

In response to Powell's embedded question, "What happens with banks," I say that, in the true spirit of unfettered American capitalism, it's about time we let them compete against each other. If decentralized finance (defi) means that consumers get higher interest rates and faster settlement times on transfers, then by all means let the old stodgy banks, with their stale coffee and ridiculous automated micro-fees, have to compete against a decentralized blockchain-based bank that does not have any offices but is open 24/7 and gives savers an actual reason to save their money.

The US's lack of support for defi solutions will hamper it in the global Web3 world of the future.

It doesn't take a genius to read that Powell quote above and conclude that it is vested interests of the old guard that is driving this anti-crypto policy at the central bank. Methinks they ought to stay in their lane and stick to the mandate, i.e. focus on keeping employment high and inflation low. That's what we pay these guys the big taxpayer dollars for at least.

The Fed's stance is such a striking contrast to where the People's Bank of China has situated itself. Not only have they spearheaded the effort to develop a national "cyber currency" (who the heck calls it that, Mr. Powell?) but they are actively seeking out the participation of their Big Tech companies like Alibaba and Tencent. Meanwhile, the Fed stonewalls Facebook for doing what any good capitalist enterprise should be focusing on - to fiercely compete with and passionately try to disrupt existing industry leaders.

If the central banks of the West continue on in this manner, as @taskmaster4450 so succinctly stated, they will have "lost the war before it even began."

That's a shame.