Is the trend towards central bank digital currencies real? And if so, is it the first step towards a global reserve currency that replaces the dollar and the euro as the currencies of choice in the reserve positions of the major economies?
Well, yes and no.
Before I expand on this answer and explain the impact that central bank digital currencies will have on the more mainstream world of foreign exchange, it is helpful to talk a little bit about what central bank digital currencies (CBDCs) are.
Central bank digital currencies are not cryptocurrencies. Central bank digital currencies are digital in their form, are recorded in a ledger (maintained by the central bank or the Ministry of Finance), and message traffic is encrypted. However, the similarity with cryptocurrencies ends there.
CBDC ledgers do not use the blockchain, and CBDCs certainly do not adopt the decentralized issuance model that the crypto audience has praised. Digital central bank currencies will be highly centralized and strictly controlled by central banks.
Central bank digital currencies are not new currencies. It’s the same currencies you already know (dollar, yuan, euro, yen, and sterling) in a new form, using new payment channels. It is a technical advance, but it does not replace the existing reserve currencies.
Digital central bank currencies are currently offered by major central banks around the world. Countries are in different stages of spread. China is the farthest. They have a working prototype of the digital yuan that will be shown at the Beijing Winter Olympics in February 2022.
If you are there and want to buy tickets, meals, souvenirs or pay for hotel rooms, you are expected to pay in the new digital yuan using the mobile app or any other digital payment channel.
The European Central Bank also moved quickly on the euro version of the European Central Bank’s currency. They have not yet reached the prototype stage, but they have made significant progress and are approaching that stage. Japan and the United States are at the back of the line.
The Fed has a research and development project with the Massachusetts Institute of Technology to study how the digital dollar could intersect with or even replace the existing dollar payments system (which is already digitized, albeit without a central ledger).
The US is likely several years away from its central bank digital currencies at best.
So, yes, the trend towards central bank digital currencies is real. How does this relate to what is sometimes called the great reset? This would be the move towards a single global reserve currency.
This movement will nominally be led by the International Monetary Fund as a kind of global central bank. However, the IMF cannot make decisions of this magnitude without the consent of the United States. (The US has enough voting power at the IMF to veto any substantive decisions it doesn’t like.)
In turn, US approval would require a global consensus among major economies including China, the UK, Germany, France, Italy and other members of the Group of Seven and the Group of Twenty.
This desire to create a true global money will include the creation of a Special Digital Drawing Right (SDR). SDRs are issued by the International Monetary Fund to member states and can be issued to other multilateral institutions such as the United Nations.
In fact, the IMF has a powerful printing press like the presses of the Fed and the European Central Bank and can flood the world with their global money. The removal of the dollar involves a meeting and agreement similar to the original Bretton Woods Agreement of 1944. The agreement can take many forms. However, the process is consistent with what many call The Great Reset.
This process has been underway since 1969 when the SDR was created. Several SDR issues were distributed between 1970 and 1981, and then none were issued until 2009 in the wake of the 2008 global financial crisis. A new issue was distributed earlier this year.
Global elites view the COVID pandemic and climate warning as a two-headed Trojan that can be used to impose SDRs on a world population suddenly accustomed to following government orders.
The recent COP26 meeting of elite climate experts and heads of state in Glasgow highlighted the use of central bankers and financial regulation to advance the alarming agenda by cutting lending and underwriting services to energy companies that do not promote renewables or pursue oil and gas. exploration (go here To learn all about the upcoming global climate tax, as well as how you can actually benefit from it).
So, yes, the trend towards a single global currency is real as well.
However, things don’t happen so quickly in elite circles. Even the Bretton Woods Agreement took more than two years to design and another five years to implement even under the weight of World War II. The transition from the British pound to the US dollar as the leading reserve currency took thirty years from 1914 to 1944. As they say, it is complicated.
On one level, there is no immediate change. The CBDC is still a dollar. The CBDC is still the euro. In the absence of a new Bretton Woods fixed exchange rate regime, these currencies would still fluctuate against each other. Our analyzes will continue as before. However, there are three huge changes that can emerge from The Great Reset.
The first is that the new global currency system will be an opportunity for devaluation everyone Major currencies in order to boost inflation and steal wealth from savers. Not all currencies can be devalued against all others at the same time; This is a mathematical impossibility.
However, all currencies can depreciate at the same time against gold. This can easily push gold prices to $5,000 an ounce or much higher to achieve the desired inflation. The EUR/USD may remain near $1.16, but the value of both the Euro and the US Dollar will be much lower when measured by the weight of gold. This would be an accelerated version of what happened in phases between 1925 and 1933, between 1971 and 1980, and again between 1999 and 2011.
The second change would be that central bank digital currencies make it much easier to charge negative interest rates, confiscate, and freeze accounts on some or all account holders. This can be used for simple political purposes or as a tool for the full surveillance situation. Monitoring incorrect behavior as defined by the Communist Party is the real driver of the digital yuan more than any aspirations for the yuan’s reserve currency role.
The third change will be the widespread issuance and adoption of the Special Drawing Rights as the only global reserve currency. The new Bretton Woods agreement could force countries to hold 100% of their reserves in the form of SDRs, and major corporations might be forced to keep their records in SDRs. This could lead to a fixed exchange rate system with currencies pegged not to gold but to SDRs.
All of these transformations are now underway. Whether they play out over years or just months remains to be seen. The exact results are uncertain. What is certain is that I will be watching developments closely and keeping you ahead of the power curve as the elites continue to push them toward digital money, global money, and the end of cash.
It is considered,
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