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RE: The Impact of a Central Bank Digital Currency on the Velocity of Money
I appreciate your insight. In a globally competitive [monetary] landscape, China is certainly making waves. With the integration of a stablecoin at the central bank level, this moves China to the "head of the table" of monetary technologies. This is definitely something to keep an eye on.
Timing is one of the most significant factors in the finance and banking sector, and the United States is woefully behind.
How do you think this will affect the strength and performance of financial institutions in the East, and do you think there will be ripple effects, with other countries following suit?
Payments and Regulation in the US:
https://www.mercatus.org/bridge/podcasts/08122019/aaron-klein-real-time-payments-and-financial-regulation
No country is advanced as China when it comes to this stuff. But they've been studying the space since 2014. The Fed just doesn't get it... yet. So I think "innovation" at the national level will be coming from Asia, particularly ASEAN countries and those countries in the One Belt One Road Initiative.
Thanks for the response! I tend to agree.
China seems to embrace the reality of innovation - digital currencies in this case - and the value of such innovation seems to be lost (or hidden) within the United States.
What do you think will be the first of emerging benefits from this move to a stablecoin?
Well, obviously, @circa, I think increasing the velocity of money will be pretty huge. This is a factor that I think most pundits are overlooking.
But on the whole should be very beneficial: 1) Less illicit trade 2) Easier to collect and assess taxes 3) More demand to hold this DCEP currency vs. CNY because it is sovereign tender but it settles much more quickly.
Very interesting. I can see this being likely.
Do you think there will be a move to digitally-operated financial instruments as well? Stocks/bonds and the containers for these, like mutual/index funds, etc?
Absolutely, @circa, tokenization is the future. It’s just hard to say when that future will come. I’m excited about the interoperability chains gaining traction - Cosmos, Polkadot, Wanchain, and Aion - Because I think that many blockchains are just siloed away right now. In order to truly unlock their potential, we need to inter- them! That is really not unlike the internet, where there was a real exponential explosion in value once we networked them all up.
Tzero and Bakkt and others like them are bery interesting in the regulated digital asset space. These guys could really disrupt the traditional markets. But again, when? We’re not quite sure. Things that are inevitable are never as clearly seen with foresight. The future is foggy. We know what’s there. But honestly, traditional banks could hang on for another 20 years by adapting, cutting costs, pivoting, and just in general putting up a fight.
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