The E-Dollar is Inevitable
At a mid-2021 gathering of financial service executives I listened closely to a debate over crypto-currency. The group involved in the discussion had a big stake in the future of which way the technology and consumer adoption was headed. It is an existential issue for traditional financial institutions.
Banks and credit unions deposit money, disburse it through payment systems, and make interest-bearing loans using those deposits. If consumers can do the same things using a globally-accepted technological means they can completely bypass the use of financial institutions. Some forms of crypto-currency do that or plan to do so very soon.
Back to the group of executives. They were engaged in collaborative investment in a range of start-up companies. Cryptocurrency is a target of interest. Opinions on whether to move forward ranged from complete avoidance of what was perceived as a quasi Ponzi scheme to a “join-em” attitude of “let’s get our own version.” The nay-sayers weren’t dominant. While only a single-digit-percentage were advocating for standing up a cyber offering next year, the bulk of the group was in the positive to “let’s watch this closely” range.
The financial executive of today is different than those I first worked with in the 90’s. Risk is not a bad word. Innovation is the spirit and driver in the field. They’re uncommonly foresighted. They definitely watch the trends among younger consumers.
Big banks, smart FI execs, and the Fed are on the same page. They see the need to move ahead in offering secure, probably block-chain supported, trusted cyber-options.
My take? The Edollar is inevitable. The Fed has already observed and forecasted for the longer haul even though they don’t air their thinking publicly. They know.
Here’s the line-up for global currencies. The Dollar. The standard. No, even though there’s whispering that the Chinese are coming for it there’s not much of a chance of a viable threat to its dominance in the next decade.
The Yuan? China was the first major economy to introduce a CBCD (central bank digital currency) in April 2020. You probably missed it because another story dominated the news back then. The plan is to eventually replace physical currency with digital. The government dubiously promises anonymity but there’s been activity - $5.39 billion worth since introduction.
The 2022 Winter Olympics will be a test of the “EYuan’s” ability to cross borders with a lot of tourists in the country.
The Euro? How short our memories? It almost failed about a decade ago. Heck, Greece almost brought it down. It’s rife with political implications and conflicts. Keeps getting pasted together by Germany and France. Sorry, but don’t see it right away. In fact, Christine Lagarde mentioned a four year timeline back in March, 21.
A national crypto-currency. Able to act as an instantaneous medium of exchange when digitized and adopted by the great “un-banked” of the world through transparent valuation. What’s not to like?
But US action on the concept has been slow. Powell stated the Fed would roll out a report in September. The fact that the dollar is the de facto world currency will figure heavily in any venture. There is saber-rattling from the SEC that the “Wild West” in cybercurrency needs to come to an end with strict regulation.
The quicker our central bank and Congress can move to establish the E$ the better. What happens to Bitcoin? Ethereum? DogeCoin? Can you say disintermediation?
Image © Bob Treadway, 2020. All rights reserved.
Photo by Art Rachen on Unsplash
Banks and credit unions deposit money, disburse it through payment systems, and make interest-bearing loans using those deposits. If consumers can do the same things using a globally-accepted technological means they can completely bypass the use of financial institutions. Some forms of crypto-currency do that or plan to do so very soon.
Back to the group of executives. They were engaged in collaborative investment in a range of start-up companies. Cryptocurrency is a target of interest. Opinions on whether to move forward ranged from complete avoidance of what was perceived as a quasi Ponzi scheme to a “join-em” attitude of “let’s get our own version.” The nay-sayers weren’t dominant. While only a single-digit-percentage were advocating for standing up a cyber offering next year, the bulk of the group was in the positive to “let’s watch this closely” range.
The financial executive of today is different than those I first worked with in the 90’s. Risk is not a bad word. Innovation is the spirit and driver in the field. They’re uncommonly foresighted. They definitely watch the trends among younger consumers.
Big banks, smart FI execs, and the Fed are on the same page. They see the need to move ahead in offering secure, probably block-chain supported, trusted cyber-options.
My take? The Edollar is inevitable. The Fed has already observed and forecasted for the longer haul even though they don’t air their thinking publicly. They know.
Here’s the line-up for global currencies. The Dollar. The standard. No, even though there’s whispering that the Chinese are coming for it there’s not much of a chance of a viable threat to its dominance in the next decade.
The Yuan? China was the first major economy to introduce a CBCD (central bank digital currency) in April 2020. You probably missed it because another story dominated the news back then. The plan is to eventually replace physical currency with digital. The government dubiously promises anonymity but there’s been activity - $5.39 billion worth since introduction.
The 2022 Winter Olympics will be a test of the “EYuan’s” ability to cross borders with a lot of tourists in the country.
The Euro? How short our memories? It almost failed about a decade ago. Heck, Greece almost brought it down. It’s rife with political implications and conflicts. Keeps getting pasted together by Germany and France. Sorry, but don’t see it right away. In fact, Christine Lagarde mentioned a four year timeline back in March, 21.
A national crypto-currency. Able to act as an instantaneous medium of exchange when digitized and adopted by the great “un-banked” of the world through transparent valuation. What’s not to like?
But US action on the concept has been slow. Powell stated the Fed would roll out a report in September. The fact that the dollar is the de facto world currency will figure heavily in any venture. There is saber-rattling from the SEC that the “Wild West” in cybercurrency needs to come to an end with strict regulation.
The quicker our central bank and Congress can move to establish the E$ the better. What happens to Bitcoin? Ethereum? DogeCoin? Can you say disintermediation?
Image © Bob Treadway, 2020. All rights reserved.
Photo by Art Rachen on Unsplash