The rise of Central Banks?
Here is our pick of the 3 most important Stablecoin news stories during the week.
This week marked an important milestone in the process of centralizing and increasing the power of Central Banks. Will this process lead to CBDC’s in a form where your ability to hold political views and live outside the “system” be rendered obsolete?
First, the milestone. Governments have always found the gold standard (tying your currency to redeemable gold) bothersome. Within days of the first World War commencing all participants severed their currencies link to gold. This war would be expensive and the Governments were not going to pay.
After the second World War, the Bretton Woods arrangement was put in place whereby the US would bind itself to the gold standard but the rest of the Western Developed world would not (as rebuilding would be expensive and they did not or could not pay). But they would tie their currencies to the US Dollar and if they had an excess could redeem them in gold. Making the US Fed the de facto Central Bank of the world. The French actually sent a Frigate to NY to collect.
50 years ago last week the US decided it had had enough of this one sided deal and broke the USD link to gold.
Central Banks have a dual role of both money manager and regulator. But with CBDC’s we should ensure that someone is responsible for watching the gamekeeper when they turn poacher? The FT thinks other Government institutions will step in and fight the consumer’s corner.
I find this difficult to swallow as now we will have all the key players under a single political direction. Who gets funded, who gets promoted and otherwise supported now gets decided in a single room. Why not just call it the Politburo?
In the coming weeks and months ahead we will be forced to focus on the question of how much power do the Central Banks really need and how much is healthy for a liberal, pluralistic and open society?
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
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