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0 sats \ 12 replies \ @Solomonsatoshi OP 19 Nov \ parent \ on: Will Chinas CBDC Yuan be more important than Bitcoin ? bitcoin
Whether centralised monetary power is a good thing depends on your perspective and how it is used.
The current global trade settlement protocol- SWIFT - is antiquated and hugely inefficient- and demands payments to US intermediary banks which many other nations and businesses strongly resent- understandably in todays digital age where SWIFT is simply a dinosaur- a slow and expensive dinosaur nonetheless crucial to the US global monetary hegemony.
Chinas CBDC Yuan can promise an alternative that is faster and cheaper.
Many nations are tired of US hegemony over trade payments.
All nations today need to trade with China, or suffer significant economic disadvantage.
I said SWIFT is the bigger issue.
Basically, the proposed upgrade is the payment rail. Being a newer rail, it's undoubtedly going to be designed better than a system designed in 1977, just as that system was un upgrade on Telex. As I understand, there's CHIPS, CHAPS and now Faster Payment, incremental improvements perhaps. The lack of competition or exclusion of competition, has been the problem.
All of this is pretty academic. What I disagree with is the need for central banks to dictate futher monetary or fiscal policy and increasingly attempting to tie this to social policy.
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Payments via traditional domestic bank systems are also hugely inefficient and present friction and costs to consumers and businesses in many countries...
Banks have been very slow to fix this as they derive huge income from it.
Regarding SWIFT many nations will not want US to continue to be able to hold the threat of sanctions against them...as you point out the lack of competition has been a problem.
Yes CBDCs deliver even greater centralised monetary power to governments and central banks but they also offer potentially very much more efficient payments processing.
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So, the China payment system is basically borowing some of the stack from eth. Which is basically a tech stack with some interesting tech but lagely unusable for mass consumption due to its minumium system requirements.
It's the second C in cbdc that is the issue. The idea of a currency being digitally native, which already happened years ago. There is no further benefit from the currency aspect, because when you borrow or loan your currency to or from a bank, it is held and accounted for digitally. The notes in circulation make little difference to the digital aspect of which the physical note is a representation of (whilst the abstractation was once thought to be vice-versa.)
The potential loss of privacy and realtime inflationary creep, as digital currency is loaned into existence, is both neither a convenience nor bringing in any efficiency. The efficiencies you mention are all owed to the developement of digital currencies in the wild. Bitcoin, and ostensibly eth, which was a playground for contractual settlements.
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Simply not true.
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When a traditional bank creates a loan, do they print up more notes or borrow them from the central bank? When a central bank engages in QE stimulus, or QT measures, does it actually print or burn physical currency?
.. and when a consumer or TBTF bank loan is repayed, do those repayments get extinquished and written off a ledger, or burned?
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'When a traditional bank creates a loan, do they print up more notes or borrow them from the central bank?'
Bank deposits are IOUs for central bank printed notes/coins. When private banks issue finance they credit the recipients account with the amount - it is created out of thin air.
The vast majority of 'money' in circulation today is that created by private banks via debt issuance.
CBDCs do present some problems for fraction reserve banking because all currency is issued by the central bank under CBDCs. However note - when a standard fractional reserve bank mortgage is paid off under the current system the amount of money (bank deposit) issued when it was created is NOT uncreated! - It remains in circulation.
Not sure where you get the idea Ethereum is used in the Chinese CBDC - it is not. The Chinese have developed their CBDC, which is operational, without any use of Ethereum. Please take some time to study the Chinese CBDC as it is the most advanced and ion use CBDC in the world today- even if very poorly understand by many commentators.
The advantages of CBDCs however derive from their vastly more efficient performance of payments- being a centralised ledger payments are instant and extremely cheap.
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Not sure where you get the idea Ethereum is used in the Chinese CBDC - it is not
I wasn't referring to the CBDC, the mBridge platform that was developed to facilitate, cross-border currency swaps. I'm assuming that includes eYuan and other tokenized assets, as it was developed in P.R.China.
"The MVP platform can undertake real-value transactions (subject to jurisdictional preparedness) and is compatible with the Ethereum Virtual Machine (EVM), a decentralized virtual environment that executes code consistently and securely across all Ethereum Ethereum -2.4% nodes. MVP thus is suitable as a testbed for new use cases and interoperability with other platforms."
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Yes with BRICS Pay now emerging the IBS has backed away from its hosting of mBridge and this is further evidence that China fully intends to lead the development of alternatives to SWIFT/USD hegemony and is active in the process.
Decoupling international trade settlements from US hegemony is crucial to the tertiary layer of Chinas Belt and Road global empire model.
They are reverse engineering the monetary hegemony that subjugated China for more than a century following the Opium Wars- they are doing the reverse engineering via Hong Kong -the original point of injury- quite elegant, and all the while most westerners remain completely unaware/in denial that this is happening.