As Governments Begin to Create Sovereign Cryptocurrencies, Is the Fedcoin Going to Be the United States Answer to Bitcoin?
by Kenneth Schortgen, TheDailyEconomist:
Over the past 10 days, two of the largest financial and industrial economies in the world rolled out plans for a sovereign cryptocurrency that could one day soon bring back gold backed money… albeit in digital form.
Yet in addition to both Russia and China publicly revealing their soon to be implementation of the Cryptoruble and Digital Yuan respectively, perhaps the most interesting thing is that both of these nations have either called for, or implemented heavy restrictions and even outright bans on de-centralized cryptocurrencies, ICO’s, and rogue exchanges.
So what does that leave for the West who up until now has only bothered with punitive restrictions on cryptocurrencies such as Bitcoin?
The answer may lie in a growing trend among Western central banks to create and implement their own digital currencies that would carry the same weight as say dollars and euros, particularly in regards to inter-bank settlement. And one of these cryptocurrencies that is becoming more likely each day is that of Fedcoin.
The cryptocurrency hype train obviously has no brakes. But could it eventually replace cash in the US? According to the thinking of economists cited by the Bank for International Settlements, it just might. And to the chagrin of the anti-establishment types that fueled bitcoin’s early rise, it will likely be run by the Federal Reserve.
Alternatives, such as the US dollar and gold bullion, have faded in stature as prices have fallen all year while bitcoin has pushed near $6,000 over the past week. Both China and Russia are exploring the use of blockchain technology to create their own, state-backed cryptocurrencies. A recent Bank of America Merrill Lynch fund manager survey showed “long bitcoin” as one of the most popular trades on Wall Street right now.
Economist Ed Yardeni of Yardeni Research asks the obvious question: Why would central banks—which derive their power as the centralized gatekeepers of fiat currency creation, check clearing and payment processing—embrace a movement that’s primary motivation has been to usurp this power in a decentralized way?
The BIS—the central bank of central banks—in its latest quarterly review posited that a crypto backed by the Fed “has the potential to relieve the zero lower bound constraint on monetary policy.” Any distinction between regular dollars and this new “Fedcoin” could be removed by establishing a fixed one-to-one valuation. Any competition from the likes of bitcoin could be squashed by regulation; not unlike how the private ownership of gold was outlawed in the 1930s when it threatened the Fed’s ability to ease credit conditions. - Pitch Book
Just as gold was a check against irresponsible fiscal and monetary policies, and had to be eliminated from the monetary supply, so too does it appear that the dollar’s days are nearing an end….
Read More @ TheDailyEconomist.com
Source: https://www.sgtreport.com/articles/2017/10/20/as-governments-begin-to-create-sovereign-cryptocurrencies-is-the-fedcoin-going-to-be-the-uss-answer-to-bitcoin
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