Central Bank Cryptocurrencies | What are they planning?



what's going on everyone my name is Nicolas Merton here at day two – in today's March 23rd of 2019 well folks I hope you are having a fantastic day wherever you are today we've got a very important topic to discuss that I feel a lot of people in the cryptocurrency space have concern over but doesn't really get publicized or discussed in most crypto media and it has to do with the question topic of central bank cryptocurrencies now we've talked a lot about Facebook or JPMorgan coin here on the channel corporate cryptocurrencies but a lot of people still haven't gotten a good picture as to what a central bank cryptocurrency might look like again anyone can create crypto currencies or digital tokens of some sort so I think it's important that we understand what central bank's as a whole are planning for potentially developing some kind of digital token or currency now the good news here is that we actually have some decent information to work with you think this stuff is kind of secretive or kind of closed off for most people but if you know where to look you can find this kind of stuff this is a speech from the Bank of International Settlements from the head of the sent the Bank of International Settlements known as Augustine Karstens and long story short the Bank of International Settlements to put it lightly is the central bank of central bank's they established the rules that you know banks across the world are going to operate under known as Basel one two and three and they have all of the major central bank leaders and you know major banking figures and heads across the world meeting and the Bank of International Settlements um time to time every given year but this recent speech from Augustine actually gives us a decent picture as to not only what data we have to understand where central banks are but also where central banks think of taking a central bank cryptocurrency and along with that what their objectives are and some of the problems that they see with doing the central bank cryptocurrency why he and many others are hesitant so I know I remember it on a lot guys just want to give you a good framework for what we're going to discuss let's go ahead and dive into it so we have to talk about the purpose here I'm gonna skip a lot of this introduction he was speaking in at the IRA Irish central bank and he's been talking about more than anything you know like how over time you know that what his money as a whole it's a very subjective thing he was talking about you know payment systems talking about a store value talking about a means of payment as well something that I can give in commerce and even talked a little bit about the history I guess central bank as much as I talk negative about central bank's idaite central bank's share a lot of the same passions I do for you know the the evolution of money over time we used to use shells and different things like that for commerce which weren't really good ways of money which is why I devolved but the one thing he emphasizes is you know talking about this future of a central bank cryptocurrency what it may look like and he emphasizes that this is really going to be playing on the inevitability of digital cash that's a big portion of this how economies especially as he uses in the examples like Sweden have been moving excessively from using physical cash it's almost to where you can't use physical cash in many locations this is very common and a variety of the economies across the world where you know digital payments are at least preferred you know this is a growing trend where we see the digital cash is going to be the framework for modern commerce and we have a lot of questions when it comes to digital cash you know how are we going to facilitate transactions who is going to be the facilitator of transactions are they going to be private some in some way shape or form kind of like how if I give you cash it's pretty much untraceable I know there's some small ways you can do it but it's it's pretty much one of the most private forms of payment you can do because there's no accounting system right so again this is a really interesting topic to discuss and it's been a growing trend in a variety of countries this is a good chart here for Sweden or basically you can see over the years here from 2014 to 2018 cash has been on an immense decline here losing a lot of ground whereas debit cards have held pretty much stagnant here and digital payments have been soaring over the past four years going from somewhere probably around 10 to 12 percent all the way up to probably around 60 65 percent so very interesting trend here to see not to mention you can see here with the age gap as well how much swish which is a digital payment system in Sweden how much you can the the had the difference in the age gaps here where cash is losing ground with lower age groups debit card has been relatively consistent and swish the digital payment system has been holding ground well with the younger on it's not so much with the older crowd now going through here the first thing that he emphasizes is the difference and this is very important to understand when you hear about central bank Ripper currencies because it also explains a little bit as to where the whole corporate cryptocurrency phenomena is there are two different types of such main cryptocurrencies wholesale cryptocurrencies and retail cryptocurrencies so let's go ahead and knock out the wholesale one if you want a good example of what a wholesale cryptocurrency would look like it would look very similar to JP Morgan coin that we heard all the buzz about a few weeks ago now why are they similar well a wholesale crypto essentially digital currency or eccentric cryptocurrency would basically be a digital accounting system for financial transactions very similar to that of Swift or other accounting systems that the financial system uses nowadays to facilitate payments and wires and the reason it's similar to this is because it's permissioned it's closed off to every day participants it's only going to be used by central banks and commercial banks we need to interact with this kind of back-end infrastructure and this is again been a topic for a long time before crypto currencies came about having a new system that central banks and commercial banks can use along with that as well we've also got the topic of a retail cryptocurrency this is something that's a little bit more on the topic of discussion that we should be interested in and this is something that you and I could use for commerce for goods and services and it starts to bringing a question as to the role of central banks now there's a lot of interesting things to need to dive into as we go through here this chart right here basically lays out you know what it could look like you know in comparing the different variables here in the 24/7 availability being accessible at any time anonymity very important topic we're going to emphasize on an interest-bearing as well so if we take a look here cash has really two of these features that is 24/7 availability and anonymity right pure a man anonymity on actions but if we take a look across the board here at a central bank token right this is resembling the central bank cryptocurrency retail cryptocurrency it's a possible feature right now a 24/7 availability given but anonymity that's where it gets a little bit off and on right you know some central banks might want to have an anonymous cryptocurrency I bet you would find this probably in some of the more you know private and then also financially free areas of the world like Switzerland things of that sort you just kind of get the anonymity and the importance of anonymity and cash in that case especially for small retail transactions I think that that's where I have my problem with when everyone's being treated treated like a criminal in that case but and they also have the topic as well of interest Baron we're basically if you were to hold a certain amount of cash you might actually get interest on in that case just by holding it similar to how you would in a savings account which you know again would be cool cash on the other hand doesn't allow you to do that so let's go ahead and talk about a few points here so we've talked about the difference between Arisa a retail and wholesale cryptocurrency our focus really should be on the retail side I have no problem with the wholesale cryptocurrency because it's an improvement on top of traditional banking accounting I'm fine with that if we're gonna continue to stick with the same old banking system or have banks and much rather be that than what we have today right that's really inefficient and you can read through the article and they kind of explain why that is but we've also talked about how central banks might not have anonymity on these transactions right and another thing in regards to that as well going into that really second point about not only is eccentric cryptocurrencies possibly not anonymous they're most likely not going to be private in any sense they're also going to be centrally controlled so they are going to be able to control monetary policy that you do they're going to have a balance sheet that the central bank is going to manage and they're going to offload and onload different types of assets they'll be able to freeze transactions in many cases these are things that Augustus doesn't really talk about in this speech here and I'm not blaming him you know he's got a lot of data here for you know pretty short speech it's ten pages but this these are the things that they're not because these are just given in their eye that they need to manage these things so that's a big difference between cryptocurrencies that are usually finite and a monetary policy you know how we only we know that there's going to be 21 million bitcoins we know that there's going to be an X amount of like coin of – of and there are all these different cryptocurrencies the big thing about all of this though guys that people haven't really factored with central bank cryptocurrencies is some of the worries but also potential next steps in the financial system that Agustin sees and mentions in his Bank of International Settlements speech on central bank cryptocurrencies and that is talking about the growing role of crypto currencies me of central bank's managing money in the economy and when we're talking about a central bank retail cryptocurrency this isn't a crypto currency that you would use in the traditional banking system it might be able to communicate with other peoples of commercial banks but when you would initially open an account to store central bank cryptocurrency this digital token they're talking about it as if in this case where he's given a speech in Ireland that you would not go to Wells Fargo or some kind of commercial bank no you would go to the Central Bank of Ireland you would go to the Federal Reserve you would go to the European Central Bank you go to the Bank of England you go to the People's Bank of China and at that central bank that's where you open your account see there now possibly going to become the depositors of your wealth not the commercial banks now agustin actually keeps quite neutral in this he says that you know if we decide that this is good you know it might be for example that people feel safer with their money at a central bank because the central bank obviously is probably the last member to fail and you know I'm you know any kind of modern economy because that's where the money is printed so they'd feel safe and that they would be almost practically FDIC insured in that matter and along with that that you know the central bank in this case if they feel that you know the central bank can you know manage the kind of activities that a normal commercial bank does in a better manner and probably more predictable and safer manner that he said you know that's fine by that but he's worried that they don't have enough of the staff the resources the tools and capacity to manage lending and manage financial services things that sort because they are becoming the bank at that point some people have talked for years about it's been a debate I think and looking for solutions for you know the kind of the central banking system and that was you know moving banking towards a more national level right being a central hub for finance and I think that even in the crypto space as much as we dislike central banks I don't think we really like the sound of that because you're making things more central you're making things have a bigger central point of failure so anyways I I don't want to go on a tangent here but these were really the major points here guys the last thing we're going to talk about is where crypto currencies are being developed under central bank's so right here this is kind of the focus work here that they're they're looking at right now you can see here that the vast majority are engaging in some form of research looking into developing or are developing central bank crypto currencies and that's continued to grow from 2017 to 2018 and I have no doubt this is gonna get very close to 100 because this actually might be a valuable step for a lot of people in developing economies in South America where basically a variety of central banks and different varying economies can come together and manage a currency and a more smaller format something not as big as the euro for example that has very vastly different economies but having something where central banks can come together and you know have a say it and keep everyone in check rather than you know having what we have in Venezuela or in Argentina but if you put those same countries in charge it's going to be the same exact problems right so I guess that's where it's a it's kind of a catch-22 anyway so you can see that their focus work is a mixture of both but also sometimes in wholesale general-purpose retail c.b.c BDCs now going down here this is really providing where we are at the moment we see that some are very likely I'm assuming this is probably Sweden you know with the krona and things of that sort some are somewhat likely and some say it's a possibility that in the medium term which is about 160 years that they could have a central bank retail cryptocurrency and it becomes more likely as well on this end that there's going to be a wholesale CB DC so taking that away guys we can see that more than one-third of central bank's are thinking in the next one is six years that they could build a cryptocurrency that's not as fast as I previously thought which is I think some good news for the kirpan of space we got to get building though because I think you know central banks might be able in many economies to get people to be complacent people aren't going to want to for example and challenge the traditional banking system because screw the Federal Reserve and it's the same reason why you know over the last few years I've seen it with the libertarian movement why it's been stagnant at like 1% because there's only a certain amount of population that really cares about that what we need to do is build a cryptocurrency or set of cryptocurrencies that not only maintain all of the things we love about crypto the cyberpunk libertarian kind of you know challenge the traditional system kind of mindset but also have the convenience and the incentive structure and benefits that a central bankrupted currency wouldn't even be able to dream of creating on their currency right and I think as well the standards of privacy and anonymity on transactions I think those are very key and important so in conclusion guys that's pretty much it for the speech if you want to look through it it's pretty digestible it's ten pages I'll leave it linked down below if you guys want to read into it and you guys can also find it on the Bank of International Settlements website make this one of your resources guys I had someone ask me about where I get all my sources and everything I have a abundance of different things I check on a regular basis and this is one you guys should check out you guys should go follow them on Twitter I'm not trying to promote this now I sell like a shill for the Bank of International Settlements that's not good but you should go keep in touch with them because they have to put out this information the reason being is that the Bank of International Settlements as I mentioned is the Central Bank of all cryptocurrencies of all central banks and with that they have to share information because they need to interact with central bank's and it be clear about the established rules so you actually get a lot of information this relatively private bank as to where they stand at the moment and when you have the head of the Bank of International Settlements being able to put out this much information in this much substance as to where they're thinking they're heading at the moment and understanding where central banks as a whole are heading it's extremely valuable in my opinion but I'd like to know what you guys think down below in the comments what do you all think about all this information that we discussed what do you think about the direction of a potential centering cryptocurrency would you use a central bank cryptocurrency or would you bank with a central bank that's that's all that's weird to think about that would be very different and I think you know some of the commercial banking system probably wouldn't take to all of that either way we'll see what happens guys that's it for the video thank you all so much for watching I hope you'll have a fantastic weekend and I'll see you all in the next video stay tuned you

25 thoughts on “Central Bank Cryptocurrencies | What are they planning?”

  1. Fuck no!! The whole point of the invention of bitcoin is to decentralize currency. Give power to the people. This video is retarded.

  2. great research,,, thanks 🍻,,, FYI the BIS was set up initially to funnel money from the uk & us to the bad side in ww2,,,,, they are just another rung on the ladder………

  3. Look at table 1 and diagrams 1 & 2 of the below document from 2017

    http://www.bnm.gov.my/index.php?ch=en_publication&pg=en_staffinsight&ac=45&bb=file

  4. So why does a central bank consider cutting out smaller banks like chase, boa, wellsfargo, etc?
    Could they be seen as competitors to each other?

  5. OK you have just described Cardano as it incorporates all those features and has the incentive structure that no bank can offer you. (3.5-5% extra ADA per year based on the amount of ADA you are holding). Maybe make a video about it or include it in your TA beefing.

  6. Always optimistic and now way more bullish then ever on crypto in general.
    Fundamentals are going far now and the party just has started.

    In this space since 2013👍

  7. It only makes sense that banks would create their own currency instead of holding multiple forms of currencies.

  8. Central Bank Cryptocurrencies will never work. I encourage them to try.
    They will continuously increase the supply and people will more quickly realise it is slowly losing its purchasing power.
    Negative interest rates… Image, programatically, the central banks 'burn' a small percentage of your coins in your wallet. Ouch.
    The private sector will make a better product than any gov or central bank.

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