REVEALED - HOW CENTRAL BANKS INTEND TO STOP BITCOIN
President of the Deutsche Bundesbank Has Some Ideas on How To Stop Cryptocurrencies.
The Cryptocurrency Challenge to Central Banks- A Response
WATCH THE VIDEO
As cryptocurrencies, which trade outside the banking system, attract more capital, governments and central banks are devising ways to try and stop and or control their rise.
In “Cryptocurrencies Fiat Killers or Strengtheners” we noted how some Ethereum projects aim to make blockchain assets spendable through the banking system via connecting them to Visa and Mastercard.
https://smaulgld.com/cryptocurrencies-fiat-killers-strengtheners/
In “Bill Would Require a Declaration of Digital Currency Holdings at the Border” we noted that the US Congress has tasked the U.S. Secretary of Homeland Security and Commissioner of U.S. Customs and Border Protection to devise a plan to stop the flows of cryptocurrencies into the country.
https://smaulgld.com/bill-would-require-a-declaration-of-digital-currency-holdings-at-the-border/
Last week, at the Bundesbank Policy Symposium, in a speech entitled “Frontiers in Central Banking – Past, Present and Future” Dr Jens Weidmann, President of the Deutsche Bundesbank and Chairman of the Board of Directors of the Bank for International Settlements gave a speech outlining some ideas on how to best address the challenges that cyrptocurrencies pose to central banks.
The Plan
After explaining that central banks are creatures born of crisis in that they are designed to come to the rescue when there are financial crisis, Dr. Weidman, noted that market interventions by central banks often provide financial stability, but not with out creating additional risks.
Towards the end of his speech, Dr. Weidman remarked that policy intervention may be required, not to address a crisis, but to address technology. Digitalization has the potential to provide financial benefits to the economy, with the risk, however, of disintermediating central banks. As such, the ability of central banks to conduct monetary policy diminishes proportional to the increase of digitalization.
Dr. Weidman dismisses the notion that privately issued digital currencies may eliminate central bank currencies, reasoning that “central banks are better able to deliver price stability than a rigid monetary rule or an algorithm.”
Therefore, one consideration might be that the central banks themselves would issue their own digital currencies- something that the central banks of Russia and China are considering. If central banks created digital currencies it would make those holding their liquid assets in the form of central bank digital currencies safer from bank solvency issues and the public would have greater protection because "central banks cannot become insolvent."
Dr. Weidman notes that in times of crisis, money holders would withdraw their bank deposits and transfer them into the official digital currency, thereby rapidly withdrawing liquidity from the private banking sector in a digital bank run.
Without deposits, Dr. Weidman observes, banks could not make loans.
Weidman’s Conclusion
“My personal take on this is that central banks should strive to make existing payment systems more efficient and still faster than they already are – instant payment is the buzzword here. I am pretty confident that this will reduce most citizens’ interest in digital currencies.”
Discussion
Will “instant payment systems” run by central banks render public interest in private cryptocurrencies irrelevant or keep them at the fringe?
What if the central banks create instant payment systems, but the public interest in cryptocurrencies does not abate?
Will central banks instead create their own digital currencies and in effect kill off the private banking sector and become the banking system in their respective countries with the abilities to create loans, make credit decisions, issue credit and track all transactions?
MORE https://smaulgld.com/central-banks-fight-cryptocurrencies/
h/t @vijinho (twitter) Youtube for alerting me to Dr. Weidman’s speech.
'Will “instant payment systems” run by central banks render public interest in private cryptocurrencies irrelevant or keep them at the fringe?'
No, of course not. There is more to cryptocurrency that fast payment times. One is to keep the government's grubby little hands away.
'What if the central banks create instant payment systems, but the public interest in cryptocurrencies does not abate?'
Tough luck for the central banks. What right do they have to govern us?
'Will central banks instead create their own digital currencies and in effect kill off the private banking sector and become the banking system in their respective countries with the abilities to create loans, make credit decisions, issue credit and track all transactions?'
There is no doubt that they will try to create their own cryptocurrency to replace actual cash, and with enough regulation it might work. Imagine a system where the government will know exactly what you've spent your money on - it'll be there in the blockchain. Then they'll be able to automate taxes depending on what goods are being bought on a particular day. They will even be able to do it retroactively.
Pretty funny isn't it?
No louis, it is not funny, and you didn't answer his question. What right have central banks to rule us?
Irony- it's not funny at all
The issue here is control..end of story. It has nothing to do with tech or instant payments. When the people have the ability to issue their own currency you have liberty. When the central banks (proxies for moneyed individuals hiding behind shell companies) have money issuance power you have tyranny.
Agree, note how the banker tiptoes around gaining MORE control by creating (nationaly or internationally mandated?) central bank currencies and the harm it would do to the private banks- seems the CBS would have no problem taking that control if their currencies were imperiled
Sometimes in life you just have to go with the flow. This advice should be followed by the weak and the powerful. If the bankers can see beyond the control illusion what awaits is abundance for all.
He does admit that digitalization has benefits for the economy but can harm central banking- so where is the problem?!!
i resteem it , thank you :0)
Thanks
1st question :
i believe the public interest is placed in private currencies ..that is what is appealing.
To answer the 2nd question i would say , the only way to make it more appealing to the public if they had to run it ( as central banks ) .. would be to make the transfer fees much lower .
and 3rd yes if they propose more perspectives ( sectors ) people will be more attracted to central banks and i bet they will do everything in their power to put fears in people minds as of talking badly about the private sector ..
but all the people that are using it today know what they are doing and only the ones who do not follow this money today will fall in the trap of central banks hands .
thank you for the great post and sharing this thought with everybody :)
Thanks for you thoughts. No matter what they do, the concept of TOTAL centralized banking I think might scare a lot of people
indeed , but i think it will divide the population , let just pray they dont go over the cryptocurrencies already in place, with some mischevious plans ...
I think if they are threatened EVEN IF the digital currencies are an overall positive to the economy they will act. They would rather promote a slowly depreciating currency (for stability) than allow people to own rapidly appreciating currencies - which is deflationary
yes i totally agree with that , but it will take a little time i hope and the ones who trusted and believed in the cryptocurrencies now will still win on that run ...
in the long run is another issue .
There seems to be a titanic mentality among many crypto holders