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Just a few years ago, few people thought about the future financial world order, and the position of the dollar – as the main reserve currency of the world – seemed to be certainly unshakable. Now everything has changed dramatically, and it’s time to think about where you keep your savings.
13 October Financial Stability Board (FSB) has published on its website a roadmap for the introduction and adaptation of central bank digital currencies into the international financial system (CBDC). Behind this document is a long behind-the-scenes work of organizations such as the International Monetary Fund, the World Bank and the Bank for International Settlements. At least seven major central banks are involved in the process (US FRS, Japan, EU, Canada, Great Britain, Sweden, Switzerland).
CBDC as a prelude to a system reboot
Why backstage? Because quite recently, the Central Bank of the Russian Federation told us that it does not see prospects for the introduction of a digital ruble in the near future. And today the Russian Central Bank saw them, and the relevant work is being actively carried out.
For more information on this process, please see our blog post “Meet the Global Stablecoin (GSC)” for specific timelines for plans to adapt international legal acts to the upcoming rollout of the CBDC.
World regulators reassure the public with statements about the full compatibility of new digital currencies with existing financial instruments. But what are the rules for conversion? Will there be differences in the approach for residents and non-residents of the issuer? For example, can you convert your cash dollar into a new digital currency without US citizenship, and under what conditions can this be done? There are no answers to these questions: we are kept in tense ignorance.
Moreover, just recently we told you that the financial giant J.PMorgan Chase launched his own blockchain project called Link and issued a proprietary token – JPM Coin. Read more about this in our material “Meet JPM Coin – banking token from JPMorgan Chase”.
The technology described in the article is already functioning, allowing not only to make international payments at an unprecedented speed, but also to solve problems with identification – both the sender and the recipient. It also ensures the secure transfer of any value (stocks, bonds, patents, etc.) based on blockchain technologies.
A reasonable question arises – why are CBDCs needed at all, if already existing and time-tested technologies allow you to digitize and transfer the properties of cryptocurrencies to old fiat systems?
And how will two financial systems — the old and the new — exist in parallel? More precisely, how long can the old and frankly anachronistic fiat system survive competitively in the presence of a new digital competitor? Didn’t think? But it’s time!
From the Great Reset to the Great Reset
Since the start of the COVID-19 pandemic, global central banks have printed more than $7.7 trillion worth of banknotes, and the Fed has outsold everyone by issuing over $9 trillion. This unprecedented issue, completed in less than a year, is nothing short of a classic “value out of thin air”.
And this debt cannot be paid even theoretically due to the complete absence of technical mechanisms for its repayment. After all, the very philosophy of the modern financial system is based on “value from debt”, and it can only generate more debt. Therefore, in the financial world, the slogan “The Great reset“(“The Great Reboot”).
On October 19, the IMF held a conference called “Cross Border Payments – A New Beginning“. Its contents can be found on the website of the organization.
Here are the names of the panel reports and the names of the speakers:
Panel 1: International payments – a look into the future
Moderator: Kristalina Georgieva, Managing Director of the International Monetary Fund
Ahmed Abdulkarim Alholifey, Governor of the Saudi Arabian Monetary Authority
Agustin Carstens, CEO of the Bank for International Settlements
Jerome Powell, Chairman of the Federal Reserve
Nor Shamsia Mohd Yunus, Governor of the Central Bank of Malaysia
Panel 2: Cross-border payments – the private sector is gaining momentum
Moderator: Dong He, Deputy Director, Monetary Policy and Capital Markets Department, International Monetary Fund
Denel Dixon, CEO of Stellar
Jonathan Dharmapalan, CEO, eCurrency
Rory McFarquhar, Senior Vice President, Mastercard
René Reinsberg, CEO of Celo
Panel 3: Cross-border payments – the role of the public sector
Moderator: Tommaso Mancini-Griffoli, Division Chief, Payments, Currencies and Infrastructure Division, Monetary and Capital Markets Department, International Monetary Fund
Tara Rice, Head of Secretariat, Committee on Payments and Market Infrastructure, Bank for International Settlements
Arif Ismail, Head of Financial Technology, Reserve Bank of South Africa
Jennifer Lucier, Associate Director, Reserve Bank Operations and Payment Systems Division, Federal Reserve Board
Sopnendu Mohanty, Chief Financial Officer, Monetary Authority of Singapore
Panel 4: Cross-border payments – a global roadmap for improvements
Moderator: Tobias Adrian, Director, Monetary and Capital Markets Department, International Monetary Fund
John Cunliffe, Deputy Governor, Bank of England
Alejandro Diaz de Leon, Governor, Bank of Mexico
At this landmark conference, a new international monetary and financial system was discussed – in the form that is vital to the modern world. And it will certainly be freed from the “diseases” of the past system in the form of unsustainable debts, and this is the “Great Reset”.
And if you think that the great zeroing is good for everyone, then you are deeply mistaken, since debt relief is just as good for the borrower (“the owner of the money”) as it is bad for his creditor (you and me).
So when you wake up one morning, don’t be surprised that all your savings are worth no more than the paper they’re printed on.
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