As cryptocurrencies and blockchain technology keeps gaining momentum in terms of growth and development, banks have slowly started to embrace these technologies for enhancing their services. Central banks from various jurisdictions across the globe are now looking to deploy their Central Bank Digital Currencies (CBDCs) to curb the use of private cryptocurrencies.
CBDCs are one of the hottest topics in the banking sector and are being designed to serve as a tool to gain better monetary control. China, which is the closest to launching a CBDC, is all set to use its Digital Yuan to bypass sanctions placed by the American government.
The motive behind developing CBDCs might be unique to every nation, but it is certain that blockchain-based solutions are the way the banks are looking at.
Discussing these various implications of a CBDC based system, Circle CEO Jeremy Allaire, is set to host a panel on YouTube with Michael Kumhof from the Bank of England (BOE), Tommaso Mancini-Grinffoli from the IMF, and Dr. Chuanwei David Zou representing Wanxiang, PBOC.
As per a Forbes report, the interview would be about the concept of “Full reserve money, the implications of digital currency and the future of the international monetary system.” The event comes at a time when the Federal Reserve printed trillions, The Bank of England just refused Venezuela access to its own gold reserves, and China is close to deploying the digital Yuan.
England and Venezuela
The Bank of England has been holding €930 million ($1 billion) worth of Gold that belongs to Venezuela, in its reserves. Venezuela had asked the BOE to liquidate the gold and “send the funds to the United Nations Development Programme so that the UN agency could procure “healthcare equipment, medicines, and basic foodstuffs.”
The BOE “refused to confirm” that Venezuela would have access to its gold reserves, and hence Venezuela’s central bank is now suing the BOE.
Venezuela has been open to adopting cryptocurrencies and it would be interesting to have an insight as to how they plan on addressing the current situation. The Venezuelan president had previously asserted that the nation could be using cryptocurrencies as a “method for free national and international payments.”
Could China be a new economic Superpower?
China is the closest to launching a CBDC and the nation has been a stern believer of the ‘blockchain not bitcoin’ notion. Over the last couple of years, China has already set itself ahead of the competition regarding cryptocurrency and blockchain technology. Despite its ban on cryptocurrencies, the nation has been making great progress regarding the development of blockchain technology.
Apart from gaining more control over its economy, one of the major reasons why President Xi Jinping has made blockchain development a core agenda for China is the political tension with America. A digital yuan could act as a solid weapon to render its economies immune to crippling US sanctions.
According to Ray Dalio, billionaire and economist, China might soon be able to overtake the U.S. In his article titled “The Big Cycles over the Last 500 Years,” Dailo believes that the world is undergoing a shift in power. Based on Dailo’s analysis and China’s efforts with its CBDC, the scenario isn’t unlikely.
It’s not just China, Venezuela, Iran, Russia, and multiple other nations are all developing their own blockchain-based projects to beat the US. The American Foundation for Defense of Democracies (FDD) had previously warned against a scenario in which one of the above countries convinces other nations to use a state-based cryptocurrency based on a major commodity export such as oil, sanctions would be much harder to enforce.
Overall, Allaire’s interview could throw light on some very important topics that have kept everyone on their toes. As of now, it is yet to be seen what the future has in store for blockchain, cryptocurrencies, and the entire world economy as a whole.