Topic: CBDCs Cannot Save Weak Currencies (Read 454 times)

I am not a fan of the CBDC system. 

However, I must agree with the statement that the state can build an efficient financial system based on the CBDC system.

All large and medium-sized corporations use such a tool for managing the production and sale of goods (works, services) as budgeting.  The USSR and communist China also used a tool called a planned economy (based on five-year plans) to manage their countries.

CBDC, combined with mandatory product labeling, can form the basis of an incredibly accurate and efficient system for controlling production, sales and consumption.  It will be a system with positive and negative feedbacks, operating in a real-time system.

It is possible that such a system will function autonomously /under the control of artificial intelligence/.

The mainstream media seems to have it that Bitcoin is dead and buried, not to be resurrected any time soon. But what the media can’t seem to grasp is that Bitcoin and cryptocurrency as a whole is a technology, not just one product or service. The real revolution is in the decentralized blockchain architecture itself. While Bitcoin may be “dying” as pundits claim, they don’t even know what’s coming next and how that will be affecting their global economy.

Just because CBDC and fiat are the same, doesn't mean it can't save fiat. In my opinion, CBDC was made to prevent people to convert their money into world of cryptocurrency as they heard that cryptocurrency is a game changer, many people got rich because of this, and a hassle free mode of payment. They might scared that these will happen because it will really affect fiat worth. In other words, CBDC is just a non volatile cryptocurrency with KYC verified users. So for me, it is made to save fiat as per my knowledge.

The main advantage with decentralized cryptocurrencies such as Bitcoin, Cardano and Ethereum is that they work under the principle of controlled supply. On the other hand, the governments are treating CBDCs as just a tool to print more and more money. It doesn't work that way. Apart from the format, CBDC and fiat currency is the same. It is not backed up by anything. They are inflationary and became more so since the governments started to print unlimited amounts of money giving the excuse of COVID19.

CBDC will help achieve good results for the government because it will be able to track users' transfers and the size of their savings, which is not the required efficiency at present, since a large proportion of the liquidity is used in the black market. But we should not imagine that it may succeed in helping weak currencies on any level.
Another important point that CBDC may succeed in achieving is that stablecoins are forced to be abandoned on trading platforms and the use of CBDC instead. This will definitely help avoid market disasters like the one that happened with Luna Network and Ftx platform.

Only one thing can really save a country's currency and its more related to balance of trade then anything else I think.  It helps if the government has a balanced fiscal plan and the underlying growth of the country is there such as demographic working age group expanding but same as alot of markets a demand which out weighs supply of that currency will lead to strength.      The rest of is window dressing, they might alter the liquidity, the monetary velocity possibly but base demand comes from a good set of trade deals and production by that country.   
  The reason USA has such a large advantage is every part of the world wants to hold that currency, its used far outside its borders as part of trade and the same can be true of every solid regularly trading economy I hope this is more true in future then now where politics and debt are too dominant.

It's certain CBDCs aren't a solution for any countries' economies, because they are a digital copy of fiat currencies. If fiat didn't solve anything, why its digital format would? Crypto adopters are investing in bitcoin and its pairs mainly due to their profitability, but also because they don't trust what their governments promote and manage in financial terms. Since CBDCs are issued by governments, people will tend to see it in a negative way, just like they see their currently fiat national currencies.

The weak national currency of the states means its weak economy. Therefore, the currency is saved by strengthening the economy of the state, and not its financial system. CBDCs are only more efficient non-cash payments of the national currency of this state compared to the current existing system of non-cash payments. They improve the functioning of the national currency, but do not strengthen it. CBDC is actually not related to cryptocurrency.

I agree with you that CBDC cannot rescue fiat because they are really one, CBDC is just digital version of Fiat and its strength depends on the economy of that country. But not all CBDCs will fail, like fiat. If the US launches its own CBDC then surely the US CDBS will have the same strength as their USD.

It's really just a digital version of fiat currency and centralized banking, CBDCs are trying to use blockchain technology to try and solve the problems that centralized systems have, because in their minds, if you can't track them, they have no control – and they really want to maintain control .

Yes, Bitcoin is a technology and in the long term, it is a technology that will have far greater impact and reach than CBDC and if progress continues on its current path of total decentralization, blockchain based tokens will continue to be the backbone of transactions and interactions that occur. on the web and in real life.

just going by UK paper fiat currency.. of government money creation(bonds and QE)

when UK government want to create say $50b
they create a bond(agreement/loan) with bank of england(central).

this is where they will give the BoE 5.1b a year for 10 years(paid via tax revenue)

this digital $50b is created by BoE and sent to the government treasury account.. to be spent by government for public services. which ends up in circulation and bank(commercial) accounts of employees of public services and thus moves around to wherever they spend it next

this $50b generates $5b(10%) in tax revenue + more on the re-spends as it circulates within a year.

so now the banks(commercial) of the public now has combined extra $50b spread over customer accounts

this also means the government needs to print $2.5billion of bank notes at a print price of $25m(10p per $10 bank note)..
just so that banks(commercial) can have on hand 5% of account balance of the new amounts thats are $50b higher.. (so that ATM's are full to meet the 5% cashflow demands of withdrawals)

but the commercial banks have to buy those bank notes from the government at face value of combined $2.5b (not the governments print price)

so while the banks(commercial) hold $50b of new money. it cost them $2.5b  to end the story of the money creation process

by going CBDC the commercial banks can save themselves $2.5b every time a central bank or government wants to inject another $50b

however it means that the government treasury cannot collect on the $2.475b profit from the money creation. but still has to pay back the $5.1b a year to the BoE in repayments.

however..
by going CBDC the government can ,amdate that commercial banks monitor the income and outgoing of tier 2-3 wallets that are KYC and tax banded. and ensure the commercial banks report incomes over X so that the government can request tax from those accounts easier (send payment requests/invoices or go to court to get court order to mandate payment seizure) which is something not so easy to do in the old fiat way. thus the rich end up actually paying tax and not hiding it away as easily

.. well thats the theory and their best case scenario for CDBC

Yeah, the printing cost have been cut. Further it helps in making out things in a better way as everything can be kept in control as it isn't possible to hoard money illegally. There are some positive things, yet this isn't going to be an success for the countries having CBDC which is limited within the country.

It is because the basis of the reserve of CBDC is still the country's financial reserve. CBDC is just a digital version of cash.  The whole financial system and structure of the country are the same so of course, it will not change anything. Even Bitcoin and other cryptocurrencies cannot save anyone's fiat currency.  Because in order to save any fiat currency, the country needs to improve and develop having a positive gain on its GDP to strengthen its financial reserve.



I agree, the economic status of a country is the main reason of a certain fiat currency getting stronger or weaker.

Yes it has the same connotations with paper money only that it printing cost is reduced from fiat but the country's economic activities and government policies will affect it like fiat too. If fiat is being devalued then it affects CBDC of the country and they sell at the same price. The value in price should be the same for both.

CBDC isnt suppose to save the paper fiat.. its suppose to replace it(emphasis: slowly over years.. not months)

the blog post in the topic creators rant is a blog about how in less than a year 1% of population used CBDC

this is because the role out was not africa wide and also in africa no one was 100% single currency so trying to get 100% in less then a year was never a goal..

even el salvador did not adopt msats(Lightning network) in 4 months before el salvador tried a new approach to get people to start using crypto. but in the 9 months after first 4month trial not all el salvadorians are using crypto

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using the details of china;s CBDC as many think that in their tin foil theories is the worse case use of CDBC

people can have "cash"(no kyc) wallet. where there are no barriers of entry and no big surveilance..

the pitfalls of most CBDC
small deposit/withdrawal amounts

as for surveillance. its not the central bank(gov) doing the watching and authorising of peoples/business payments.. like fiat thats for commercial banks.
and those commercial banks hold the KYC of tier 2,3 not the central bank
there are still regulators that commercial banks report to and they report to courts and courts authorise the data grab.of tier 2/3 customers/businesses

.. so it operates the same as the US fiat system now. just electronic
the pitfuls is that the commercial banks can more tightly watch on the riches money movements and tax report them easier. no more suitcases of digital cash un accounted for. for the rich. only pocket money wallets of digital "cash" for  the small spenders

Totally agree that CBDCs won't save weak currencies.  Fiat 2.0, I mean CBDCs, can't solve for the unlimited printing press of some of these currencies.  These currencies will be devalued due to their inflationary nature.

I agree, whenever there is an economic crisis the average people asks for the government to do something about it, but in many cases the politicians behind those governments are the ones which are directly responsible for what is happening, how can anyone expect for the solution to come from the people that caused the problem in the first place? If they knew how to solve the situation then the crisis would not have occurred to begin with.

The CBDC is not different from fiat currency. The difference is one is an offline or paper version while the other is a digital version. If the offline version is weak, there is nothing the online version will do to redeem the weakness. This is to say that the reason that CBDCs were created is not to combat the weakness of fiat, rather it is to promote government agenda of cashless economy. Also some countries joined the bandwagon because they don't know how the blockchain technology will turn out to be in the future so that their country will not be left behind 

for those that cant read lengths of text or do research.. here's the summary..
its B not A


to find out what i am on about try to read

alot of people are screaming with tears and tin foil that CBDC is evil. devils hand stuff.. but its obvious those people have never read a CBDC whitepapers or examined one close up. they just found a blog piece of some other non researcher that calls it bad, just to back up the screamers bias

..

many many CBDC are not set up the way cry babies think. yes there are pitfuls. but its not what you think

for one. although a central bank "pre-mines"(to compare buzzwords) trillions. they then distribute that to several commercial banks. and its the commercial banks that do the day to day work of keeping the bank statements(tx history) and also a separate database for KYC.

in many CBDC the commercial banks offer 3 tiers of accounts(wallets)
if you're on a low income needing only to ever receive or spend under X per month. meaning say $1k a month and 'save' upto $12k a year
meaning low untaxable threshold spend accounts.. there would be no KYC

then for middle income there is basic kyc
and then for large businesses/rich there is full KYC

much like how VisaCard offers:
a no kyc virtual/debit gift card program
a basic account debit/credit card with basic kyc
and a platinum/black card for the rich with full due diligence/kyc

obviously if you want to receive more than $1k in any one go you need to upgrade to the middle tier. and if rich upgrade to top tier. but you can still have a spare bottom tier account(wallet) for just play money spend amounts

there is also fundamental rules built into these systems like fungibility where by it requires court orders for authorities to gain the KYC data from the COMMERCIAL BANKS and also to freeze accounts

yep even china's CBDC functions like US fiat today
yep even chinas e-yuan is not an (A) scenario. its (b)

In theory.  It's more like them having full control of someone's money. The failure of eNaira may just be because the Nigerians have the option and one of the options is BTC.

If the people have the option compared to the CBDC, they will be taking that option unless the CBDC really offers something worth like airdropping thousands of the money so it can be adopted faster. The problem is if the airdrop was all spent and people still abandoning CBDC, they can't just airdrop all the time.