Can a decentralized digital currency with some extensions be used as a world currency for settling inter-national accounts (similar to proposal of Bancor) ?

in #bancor7 years ago

The irony here is that Bancor requires a central authority structure. Keynes invented the bancor to curtail the ability for wealth to move between countries seeking the highest interest rate or tax shelters.

The Bancor that Keynes imagined would not be an international currency. It would rather be a unit of account used to track international flows of wealth. Individuals could not hold or trade in bancor. All international trade would be valued and cleared centrally in bancor.

As a decentralized digital currency, bitcoin promotes freedom of movement of capital and actually makes transfer of capital harder to track. This actually goes against what that bancor was invented for.

To be honest, I'm not even sure if bancor will solve the problem of helping govenments stimulate their economies efficiently. Currencies are backed by the faith and credit of the country's government, so a currency exchange is in effect exchanging the faith in one country for another's. Its strength is that the adjustments can occur very quickly, and provide stimulus that a country in economic turmoil needs.

A country like Greece, having given up its currency in favour of the Euro, is unable to adjust its competitiveness by depreciation and has to undergo a much more painful and slow adjustment. Bancor would make this issue even more problematic.

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