Future Proofing?!
About a year ago the Bank of England released a paper on the Opportunities, Challenges, and Design of Central Bank Digital Currencies.
Today, the Financial Times reports UK Considers Creating Central Bank Digital Currency.
The Financial Times commented the “Aim would be to future proof sterling against cryptocurrencies and improve the payments system“
The idea that one can future proof fiat currencies against anything is of course ludicrous.
Britcoin?!
Reuters asks ‘Britcoin’ Not Bitcoin?
British finance minister Rishi Sunak told the Bank of England on Monday to look at the case for a new “Britcoin”, or central bank-backed digital currency, aimed at tackling some of the challenges posed by cryptocurrencies such as bitcoin.
A BoE-backed digital version of sterling would potentially allow businesses and consumers to hold accounts directly with the bank and to sidestep others when making payments, upending the lenders’ role in the financial system.
“We’re launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC),” Sunak told a financial industry conference.
“The Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the UK, and will engage widely with stakeholders on the benefits, risks and practicalities of doing so,” the BoE said.
What About Physical Cash?
The BoE said a digital version of sterling would not replace either physical cash or existing bank accounts.
Yeah, right.
Q: Once central banks can track every penny, guess what?
A: They will track every penny
Governments will know where every penny is coming from and going to and tax everything.
They will sell this scheme as a necessity to combat drugs, tax evasion, and a necessity for fairness.
Once in place, if governments ever decide people are “hoarding” money they will consider putting time limits on it to force people to spend it.
That’s what’s coming. And the pace seems to be picking up. No one wants China to be the first.
Mish
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“Once in place, if governments ever decide people are “hoarding” money they will consider putting time limits on it to force people to spend it.”
“Buy Stonks.” That would be an irony of forcing people to spend money- spending it something that the government didn’t intend people to spend it on with their time limit enforcement.
tack a social credit score on that digital currency and you have… a weapon.
Yup. “Our records indicate you are affiliated with tradition-based organizations, so the value of your currency at our GIANT ONLINE store is market rate X 0.9”.
The reason governments want to use crypto is simple but the outcome will be finding out a large percentage of the global economy is involved in money laundering. A secure form if currency would end all the money laundering that goes on and alia allow the government to protect people of their choosing. Financial crimes are worse everyday and responsible for a larger percentage of the global economy than people think.
There is some truth to this…not sure it’s really worth it to go all in on crypto just to get rid of money laundering, but that would be a positive thing…..but once again it hangs on private cryptos being legislated into the dustbin of history.
….and which is worse, the ECB is planning the same……to be honest though I really don t see the point, we are already quite financially ‘digitalised’ and controlled the way we are, aren t we ? Commercial banks are more catholic than the pope these days; won t accept a bag of ‘fishy’ money and will report shady transactions , so what are they actually up to and what difference does it make? ..
I suspect one aspect might be that they’ll be able to more easily bypass the current swift payment systems etc. International transactions could take place without going through the dollar. I’m guessing.
BINGO
I addressed that in a post previously
Countries can escape US sanctions
I see the European Parliament are threatening to shut Russia out of the Swift system over Ukraine tensions.
And in response as reported by Zerohedge,
“Russian officials have recently called Ukraine’s lobbying to get Russia banned from SWIFT “a declaration of war”.”
Sberbank, the largest Russian state-owned lender has already applied to launch its own blockchain based platform to facilitate its own digital currency. However as Russia seems to be best mates with China at the moment maybe they’ll use there’s?
In any case political tensions seem to be hotting up, I’m amazed the markets seem so sanguine about it.
I wonder how many people will trust the Britcoin? At least with crypto’s you know there is a finite amount, can’t be hacked (or expire), anonymity, decentralized platform etc.
Clearly governments don’t want any of those features in their own coin. So the question becomes a matter of trust and government trust is pretty much at an all-time low world wide. What exactly would Britcoin provide that credit and debit cards don’t already do now?
When the governments all have their own fiat crypto, other cryptocurrencies will have to be made illegal. Bitcoin might survive, which would be a shame, actually….but a lot of very rich people own it, and therefore it might get special treatment.
“…but a lot of very rich people own it, and therefore it might get special treatment.”
Nope. Only if “they” are connected is what matters. If you are “rich” because you got in early with cryptos, then you are a fat pig waiting for slaughter, as far as the well-connected are concerned. The smart fat piggies would be unloading some of their positions right now if they sensed the largest pig of all is about to enter their pigsty…
I’m talking about people on Wall Street who have already made significant bets on cryptos being the first new asset class in 100 years….buying and selling bitcoin futures and that kind of thing.
Yes…the crypto libertarian sovereign citizen types will probably be hung out to dry. No government wants them to win.
The only thing “different” about Central Bank cryptocurrencies will be that they go DOWN in value, not up.
You will be able to spend the Central Bank version on goods and services.
I can’t wait. I find a wallet full of bills and coins an inconvenience. Still have coins sitting for years in my bedroom
Cash is on the way out in the UK anyway. Many more people are using their phones or cards for payments, even for small amounts. Cash usage is being allowed to dwindle and I’d expect that to continue. Any CBDC will run alongside cash and existing bank accounts and I doubt most people will notice any difference.
In my opinion they will use the new CBDC’s it as a good excuse to restrict/ban other cryptos though.
Existing accounts will be tied into CBDC, cash will become more and more difficult to use.
Covers a lot of this in various posts, about how access to cash is decreasing, for example rural, post offices and ATM numbers. I think it would take a decade or two if ever, to end cash, but you look at the new attitudes of society and definitely cash is being more and more seen as a relic by various. Central bank initiatives are towards no cash.
“cash will become more and more difficult to use.” Yes I agree, fewer people will want it so it will be more difficult to get. Not so many ATM’s, fewer bank branches, etc.
I’ve been seeing this coming for a while. Sovereign cryptos and perhaps a different crypto for interbank use.
Negative rates are no problem to achieve if cash is not a form of money.
It solves the biggest problem the banking cartel would like to solve.
It makes tax cheating with cash impossible, so the the government has to like it.
As a businessman, I have to have a bank account…so it’s just an added cost of doing business. More drain, no gain.
They will sell this scheme as a necessity to combat drugs, tax evasion, and a necessity for fairness.
Not a bad argument
Here in America, systemic racism will be added to the litany.
great story mish, it is exactly how i feel also. This is a worthy subject for everyone to comment on. It seems almost great time for those who want to implement it. If anything they will certainly profile and classify people. So many implications to list.
“Once in place, if governments ever decide people are “hoarding” money they will consider putting time limits on it to force people to spend it.”
That is the fear and the result would be that people would keep their wealth in tangible assets that do not have a time limit and not in savings. A subterranean barter economy would develop buy and pay for services and goods. Foreign paper currency could also be used. To be brief it would resemble a lot to what happens in economies going through hyperinflation.
I don’t think a UK government would do this. Telling people they have to spend their hard earned money by a certain time. It wouldn’t be politically acceptable so would risk votes. It also goes against the idea that people should save for their retirement etc. They certainly wouldn’t want to encourage a subterranean barter economy, they’re trying to encourage people to conduct their affairs within the financial system. So although they could technically do this I think it’s highly unlikely.
I have been against crypto from the first I heard of it.
Once money is completely electronic you will lose basic freedoms, not now, but in the central bank digital currency that I feel is inevitable. Enjoy Bitcoin while it lasts.
You lose the freedom to sell lemonade by the side of the road without a paperwork nightmare for your kids.
You lose the basic right to stash cash under your mattress and be a hidden millionaire if you so choose.
You lose the right to anonymously give money to a charity.
I have a friend who loves crypto. I always ask him “what happens to it when governments outlaw all crypto use, for payments etc, except the govts own cryptocurrency”. No answer.
They can charge negative interest rates and force you to pay them. Unfortunately, I dont think this will stop the very thing they pretend to be fighting against for our safety. Criminals and black market will always find a way around it
I think crypto is a great trading tool, but once the govt puts down the hammer, im not sure there is any function to it. I will admit, I am not an expert in this, so I may not see some possible utility to it, when governments clamp down
Dr. Manhattan – That is how I see it as well.
100%. The timelimit function is very scary. Im not so sure it wouldn’t be used for nefarious reasons to rig markets, how about estates and heirs receiving $$$. I think this removes checks and balances from capital markets, to a certain degree. Governments could have too much power. Especially in partisan environments. One might not agree with the other side, which ever side you are on, but one is certainly for the individuals right to control his own money