Admittedly, it’s not central banks’ finest hour.
? As inflation is rising across the world in a natural (and totally expected) reaction to central banks’ unlimited money printing, some central bankers try to convince people that it “came out of nowhere”, like Christine Lagarde in her recent interview that has quickly spread across the globe due to its spectacular absurdity.
Luckily for her and her colleagues, the energy crisis provided some sort of excuse. ? However, the obstinate refusal to admit that central banks playing politics has impoverished millions of people is frustrating, and does not give a good feeling about what to expect next.
The biggest item on the “next” agenda is CBDC, and more and more central banks speak about it: India started its CBDC pilot yesterday, UK’s new prime minister Rishi Sunak is a fervent supporter of the idea, the Fed is considering the digital dollar, and the ECB is developing a digital euro.
Even BIS, the central bank of central banks, is encouraging CBDC development, and is even ready to use the enemy methods to try and make it work. Today it announced “project Mariana”, which will study the possibility of using DeFi for cross-border settlements in CBDC. More specifically, this collaboration between the central banks of France, Switzerland and Singapore will explore the AMMs, or automated market makers, as opposed to the traditional process of matching buyers and sellers.
? As public learns more about the dangers of CBDCs (threats to privacy and China-style social credit system being some of them), it is less and less thrilled about the notion. Even central banks’ descriptions of how easy it will be to drop (newly printed) social aid money directly from central banks to people’s wallets fails to generate enthusiasm. The promise of smooth cross-border payments is another try, even if it’s mostly aiming banks.
In our opinion CBDCs will not answer central banks’ flaws, they will only make these flaw’s consequences for people even harder ?