Central bank digital currencies (CBDCs) have arrived on the global stage, starting with China, who has already piloted their digital yuan at an experimental level among citizens of one province so far. USA has dragged their feet on this move and that could become their downfall. We are forever in a tech race and it looks like those who adopt and embrace the new era of blockchain and digital currencies will lead the way of the future.
Of course, USA may simply be observing the possible mistakes and learning curves of the Chinese rollout of their digital currency, and may then leapfrog ahead with some further innovation, but that’s just a guess. The ECB (European Central Bank) is also toying with the idea of launching their version. This is becoming the new norm in macroeconomics, and we may see a Fedcoin if rumors are anything to go by. Buy the rumor and sell the news, as the saying goes.
Well this news may speed up financial innovation but it may be competition for cryptocurrencies, particularly stable coins. Imagine if the centralized national treasury of your country brings out a digital sovereign currency. It won’t be decentralized of course, but it will be digital. Why will we need USDT, USDC, Dai or Paxos, or any of the other stable coins after that? They may become obsolete. As the industry changes and advances, one year’s hot asset may become relegated to the annals of history. This wouldn’t be the first time in the crypto industry.
Naturally there will be limitations in privacy and control when using the CBDC, so independent stable coins will presumably still have a place. Fortunately bitcoin and altcoins will not be too affected, since they perform quite unique functions and have unique properties, like being private (Monero, Zcash, etc) or are decentralized (like bitcoin, etc). CBDCs will be unlikely to disrupt them to much at all, as long as regulators continue to allow the leeway required to continue trading them.
Multiple national treasuries have explored the idea of having their own CBDC, and it’s only a matter of time before more and more of them emerge on the scene. That said, a report just out by the IMF declares that only 40 nations, or 23% of those investigated, are actually eligible to issue their own digital currency. Read more here.
It looks like nations will have to rewrite their laws if they want to actually follow suit with China and launch their own digital fiat currency. Once it becomes a legal tender in any country, there will be nothing to stop them all from going digital and harnessing blockchain technology for themselves.
I foresee China offering their digital yuan as a global legal tender, particularly as a means of payment for imports and exports on a mass scale. Apparently they will also launch a global lending facility to actual individuals in many nations soon, particularly third world countries in Africa and South America, and this will be in digital yuan. So already China has a plan to globalize their currency via the CBDC.
The US dollar is also slowly being dethroned as the world global reserve currency as major competitors like China, Iran and Russia engage in trade via their own fiat currencies and not the petrodollar any more. So not only is the yuan rising in a digital format, but the dollar is sinking as its days appear to be numbered.
The global macroeconomic system is shifting in historic fashion, and cryptocurrency traders and investors are already ahead of the curve, with our involvement in bitcoin and altcoins. We also already use digital wallets, which will be the norm in the near future as we move to a cashless society. What is your insight regarding CBDCs and the rise of the yuan? Let us know in the comments below how it looks from your perspective.
(image pixabay)
Posted Using LeoFinance Beta
For the purpose of privacy I'd say. CBDCs will be in total control of CB and governments. I shared my view extensively on this topic in a post yesterday.
I'm totally against CBDCs and digital central banks issued money. The world is basically copying China on a large scale on everything and that's not good at all.
China has a lot of control over its population and it's getting even worse, crypto is about freedom now control.
Posted Using LeoFinance Beta
Hey there Ace, what a coincidence that we wrote about the same topic. Yes if the stablecoins can offer privacy then that is much better than the CBDCs coming.
It's strange how the west seems to be following the China model now. I see it as a global takeover by them, or the elites who run them and the whole world. They want to impose their China model upon the entire planet now by the looks of it.
Posted Using LeoFinance Beta
Indeed. David Icke used to say that whatever China is doing now the west will make a reality in a few years after.
Posted Using LeoFinance Beta
@tipu curate
Upvoted 👌 (Mana: 52/78) Liquid rewards.
Hey there many thanks for the tip friend, I appreciate it.