Central banks worried that they won’t be able to control newly emerging world currencies

Digital money, whether it be centrally controlled or private, is here to stay. The much touted central bank digital currencies (CBDCs) are in the very early stages of development, and could cause all sorts of instability issues. Private digital assets like crypto are already up and running. They are also facing growing pains, but will they be able to take advantage of being first movers?

The world is at a crossroads as regards the emergence of a new world order, and with it, a new world reserve currency. The current world monetary system based just on fiat currencies is completely spent and no longer serves world populations.

Since the Federal Reserve took over the reins in 1913, the dollar has lost 94% of its purchasing power. This debasement really started to speed up when president Nixon announced that he was taking the dollar off the gold standard in 1971.

Because of how the system works, just about all other fiat currencies have debased even faster than the dollar. In fact, in order for each country to remain competitive, they are all debasing their own currencies, and it appears that they are all in a race to zero.

With the Covid pandemic, the U.S. printed 40% of all the dollars that have ever been in existence – in just 2 years! No wonder the U.S. is currently in the midst of raging inflation.

The average individual is the one who has suffered most. A rising percentage of the U.S. population is only able to exist from paycheck to paycheck, and surveys suggest that the average person is not even able to muster more than $400 if an unexpected cost appeared.

So fiat is dead – are CBDCs next?

Governments and the world elites are already hatching their plans for what is to come next. For the established order of central banks a central bank digital currency (CBDC) appears to be the preferred option. 

According to PWC, 80% of the world’s central banks are exploring the development of a CBDC. China is the leader of the major countries that are investigating this option. According to the PWC report, as of March this year, pilot programs are running in 12 of the country’s cities.

However, there are still many unresolved issues here. A Fed paper published in March stated:

“A retail CBDC could magnify financial sector stress, forcing the Federal Reserve to provide more liquidity to banks through existing tools … the Federal Reserve’s longer-term footprint in certain asset markets, such as in US Treasuries, could become more pronounced.”

Even if a superpower such as the U.S. decides to go down this route, some estimates are that it could take up to 5 years before it rolls out its own CBDC.

Many analysts have looked at CBDCs and have concluded that they may certainly bring more speed and efficiency, but this could well be at the expense of privacy.

Bitcoin – currency for the people

In the here and now some cryptocurrencies are looking to effect private payment networks. However, with any new technologies, there have certainly been some major hiccups on the way.

For all the many cryptocurrencies out there, the one that has managed to flourish the best is still bitcoin. It’s still not widely recognised as a payments network, but with the Lightning Network, who knows what can be achieved.

What bitcoin is going some way towards achieving though, is to be a trusted and non manipulable store of value. As word gets out that fiat currencies are close to melt-down, many people may well park some value in bitcoin which has a lot of advantages over the more traditional safe havens such as gold and silver.

Yes, bitcoin and all the other cryptocurrencies are currently in a bear market, but that also appears to be the case for equities. The worry for central banks, and the governments behind them, is that as adoption grows for private digital assets, there is likely to be some stiff competition for their own proposed digital bank coins.

Bitcoin is truly a currency for the people as it cannot be shut down by governments and can be used by one person to transact with any other without any bank or other third party saying what goes.

Central banks certainly are worried. With technology providing many avenues apart from narrow, government sponsored ones, people are likely to compare the freedom they get with the likes of bitcoin, and the oppression they will suffer with CBDCs. It doesn’t look like a difficult choice.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.