Future Of Digital Currencies: Former Buba Head & The FT Get Horribly Muddled

Tyler Durden's picture

Of all people…

The former head of the conservative Bundesbank believes that central banks need to embrace digital currencies and he’s concerned that they’re being left behind. This might be interesting, we thought. Axel Weber has been talking to the FT but, it turns out, he hasn’t shaken off his bureaucratic roots since he took on the Chairmanship of UBS. Instead of embracing Bitcoin, Ethereum, decentralisation and private enterprise, Weber thinks central banks, and the likes of UBS, will benefit from creating their own versions. According to the FT.

Central banks should be more open to creating digital versions of their currencies, which could offer significant benefits to society, the chairman of Swiss bank UBS says. Axel Weber is a past president of Germany’s conservative Bundesbank — and was once tipped as a future head of the European Central Bank. As UBS chairman, he is helping to drive a revolution in how banks, companies and individuals conduct financial transactions. In an interview with the Financial Times, he now worries his former public sector colleagues may be left behind.

 

“Whilst the official sector very often looks at the risks of these new means of payment, the private sector tends to look at the opportunities they offer,” he says.

What’s worse, a central banker or a central banker who thinks his time in the private sector makes him somehow superior to his former colleagues. Uggh. Anyway, rather than highlighting the transparency and money trail aspects of Bitcoin and its ilk, Weber sees tighter regulation to crack down on…you guessed it…the usual nefarious list of crimes which the authorities have proved incapable of policing for decades before Bitcoin was conceived. The FT continues.

The chairman argues the issue is not the volatility of bitcoin prices - the currency is “simply too insignificant to matter” from a financial stability perspective. It’s more that the threat of the crypto world financing terrorism or enabling money laundering will eventually prompt a stronger response from authorities. There is “a relatively high probability that regulators will regulate it at some point”.

Now the FT, possibly influenced by comments from Weber, begins to get itself muddled, arguing that central bank-created digital currencies would, in contrast to Bitcoin, act as stores of value. Because…they would be “backed by the monetary authorities”.

Less clear cut, however, are likely to be arguments over digital currencies issued by central banks. Like cash, which they could eventually replace — but unlike bitcoin — they would be backed by monetary authorities, so they would also act as a store of value as well as widely accepted means of payment. In China, the central bank has said it will develop a digital currency using the blockchain technology behind bitcoin. In Europe, Sweden’s Riksbank published a report in September suggesting there were few obstacles to issuing e-krona. But other central banks have been much more cautious. Jens Weidmann, Mr Weber’s successor as Bundesbank president, argued the focus should instead be on improving existing payment systems. Like the Bundesbank, the Swiss National Bank is not convinced of the need for central bank e-currencies.

The question of infinite versus finite supply was not mentioned. Moving on…

If conventional fiat currencies were genuine stores of value, they should be a haven in times of panic, obviously. Instead, the FT fears that customers could exacerbate bank runs by switching funds out of fiat into digital currencies in a crisis.

There are fears that in times of panic, customers could quickly switch funds out of normal bank accounts and into e-currencies, exacerbating bank runs. Germans and Swiss also remain heavy users of cash - unlike Swedes.

While Weber makes the valid point that digital currencies can reduce the cost of payment services and provide transparency, the FT article articulates the benefits in a surprisingly narrow way.

Mr Weber, however, says central banks are wrong to think it is a case of either traditional cash or e-currencies. Payment patterns evolve, he says, with younger generations more likely to pay via mobiles, independently of banks. If central banks regarded digital currencies as an opportunity, they could “probably provide non-account-related payment services for society in a cheaper and more economic way”.

 

The advantages would be most apparent in geographically large countries, where cash transport is expensive — such on the African continent. Mr Weber envisages digital currencies not having the anonymity of cash — indeed features in the currency could identify users, so minors could be prevented from buying alcohol, for instance. But the technology would have to be hacker-proof. “It has to be a very secure means of payment.”

In true bureaucrat fashion, however, UBS is developing its own digital currency which will use blockchain technology to enhance its settlement process.

Meanwhile, UBS is pressing ahead with its own digital currency. It is working with other banks, including Barclays, Credit Suisse and HSBC, on a “utility settlement coin”. It would use the same distributed ledger technology as blockchain and could be used to clear and settle financial transactions. The idea is that “coins” used for transactions would be backed by cash held in accounts at central banks. They would be safer and quicker than current systems based around a single centre counterparty. Mr Weber reports “an openness by central banks to hear about the concept” but admits the scheme is a long way from becoming operational.

Like JPMorgan’s Jamie Dimon, Weber is pushing the “Blockchain is good, Bitcoin is bad narrative”.

Debate about the future of digital currencies has been overshadowed by the hype over bitcoin. Does Mr Weber worry a bitcoin crash might set back digital currency pioneers? The UBS chairman is adamant it will not. “People do…draw the distinction between the construction of bitcoin or cryptocurrencies as they are now, and the potential that the underlying technology has,” he says.

Weber holds back in the article from laying out the globalists’ wish for a digital world currency, but we have little doubt that he would, if asked. We were reminded again of the famous Economist cover from 1988, which predicted a world currency in 2018…with that slashed zero symbol in the middle of the coin.

Slashed zero from Wikipedia:

The slashed zero glyph is often used to distinguish the digit "zero" ("0") from the Latin script letter "O" anywhere that the distinction needs emphasis, particularly in encoding systems, scientific and engineering applications, computer programming (such as software development), and telecommunications.

(H/T Ned Naylor-Leyland, Old Mutual Global Investors)
 

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hedgeless_horseman's picture

 

Bob-the-Central-Banker punching bag...

If you have a man on your Christmas list, like me, that is about half-a-century old, then consider this tool to help him keep his testosterone levels up, naturally, without drugs.  Just 5 minutes of beating the fuck out of Bob-the-Central-Banker, after my regular trail runs, and I am much better off physically, biochemically, and emotionally.  Easily converts to Larry-the-Lawyer, Paul-the-Politician, and Joe-the-Journalist. 

http://www.zerohedge.com/news/2017-11-14/hedgelesshorsemans-annual-twelv...

tmosley's picture

Maybe while they're at it they can reinvent the wheel.

https://imgur.com/a/qPEqj

Pinto Currency's picture

 

End use of deb-based currencies.

Time for sound money - gold and silver.

Ignatius's picture

What's funded more terrorism than Federal Reserve Notes?

What they always mean, and never admit, is what are they gonna do about monies they don't control.

Two Theives and a Liar's picture

Yup...whatever happened to that Gold Dinar and a certain African "leader" that was pushing for it? 

knukles's picture

Why oh why is my initial reaction to the Economist and FT coming up with something "constructive" for Joe the Plumber not over-brimming with joyous optimism

BLOTTO's picture

What happens if in the future they make you get micro chipped in order to use your digital currency?
.
But no, thats not possible... just willing cunts as we speak getting chipped so they can wave their arm and get a bag of dorito's from the staff vending machine.

Raffie's picture

Ledger Nano S is what I got.

Ledger Blue looks great.

Here is a new wallet coming - https://asicvault.io/#header

btClunker's picture

I don't mind that one but the UI on the Trezor is much better. But I guess the price mentions that. 

Greenspazm's picture

The Trezor hardware and software is, of course, absolutely trustworthy. No back doors, no exploits, no spyware.

Mustafa Kemal's picture

"Give a Trezor for Christmas..."

I have given several Ledger Nano Ss to nephews and nieces.

And they are a hit: Uncle Mustafa, can you help me find my BCH? Their eyes are opening. 

Two-bits's picture

Let me know when uncle sugar allows you pay your tax bill in bitcoin.

WillyGroper's picture

that gold coin symbol cracks me up.

NO-thing.

hahahahahaha

Greenspazm's picture

That is one of the most essential components of the con. Make the marks think they are buying something tangible rather than digital nothings backed by nothing.

peddling-fiction's picture

It also is the half-diminished sign in musical chord notation.

First toasted by the Phoenix, then boned, and after that, we take some more.

They do have a sick sense of humor.

WillyGroper's picture

dopey me...i should've, but didn't make that "harmonic" connection.

or will it be harmonic distortion?

do ray meeeee

GlassHouse101's picture

2018 Economist Mag - Agenda 2030 & chem trails sun reflecting . . Mini Ice age.

https://shop.economist.com/products/the-world-in-2018

menchivist's picture

 

Central banks should be more open to creating digital versions of their currencies, which could offer significant benefits to society, the chairman of Swiss bank UBS says    Thisd is the beginning of the big corruption

DC Beastie Boy's picture

We already have currencies offline which is gold and silver and grains and chickens and commodities and usd (for now) and online we have visa, mc, amex which can be used worldwide.   

 

Rex Andrus's picture

"Being a professor of economics beats working for a living." ex-professor of economics Anthony Sutton https://www.youtube.com/watch?v=-nd8KGzjXgQ

Mr_Potatohead's picture

I'm shocked - absolutely shocked - that CBs would want to create their own digital currencies ipo bitcoin.  Don't they know about the S-curve, the disruption coming to the financial system, and the desire of crypto junkies to avoid paying taxes on their ever-increasing stores of value?  Please, tmosley, tell me it ain't so.  You promised that this kind of stuff wouldn't happen.

daggerhashimoto's picture

absolutely clueless.

Falconsixone's picture

Does it cause displacement of water?

TeaClipper's picture

Slashed zero symbol = Golden Ratio

JibjeResearch's picture

Hello SDR/XDR cryptocurrency...

Bye bye BTC, BTG, BCH..... and Gold, Silver

 

HRClinton's picture

Re.. "It’s more that the threat of the crypto world financing terrorism or enabling money laundering will eventually prompt a stronger response from authorities. There is “a relatively high probability that regulators will regulate it at some point”

Let's get something clear about Crypto Currencies (CC):

People across the world are adopting CC to escape the fiat Ponzi that the Central Bankster cartel has created.  It is a REPUDIATION of the CBs. The day (((They))) try to take over a given CC, is the day people like will walk away and use a different CC -- a libertarian and globally independent CC.

We're in the PARALLEL ECONOMY, and we're NEVER going back to the (((Plantation))), MFers!

quasi_verbatim's picture

Bailing-in with cryptos is so easy-peasy once you've greased the killswitch.

HRClinton's picture

Re.. Now the FT, possibly influenced by comments from Weber, begins to get itself muddled, arguing that central bank-created digital currencies would, in contrast to Bitcoin, act as stores of value. Because…they would be “backed by the monetary authorities”.

Riddle me this Weber/FT:

1. What "authority" do CCs or does BTC need, other than the full faith by its users?

2. Assuming for a moment that "backing" were needed from "authorities", what is backing these same "monetary authorities"?  I mean, besides Mind-jacking (Jedi Mind Tricks), and the use of force?

Nice attempt at the Jedi Mind Trick though: "You need the approval and backing of (((Monetary Authorities)))".  Asshole!


Exponere Mendaces's picture

Canada tried a bank-coin - it failed.

Banks can create whatever they want, doesn't mean that anyone besides their testing teams will utilize it.

Its the same misguided attempt that tried to emphasize "blockchain" over the entire system. Banks have "not invented here" syndrome, so they'll spin their wheels for a while finding out that they can't get just one side of the coin. (pun intended)

It doesn't matter much though, by the time they pull their collective heads out of their asses they'll be nearly buried by the tar pits they are flailing in.

Ignore crypto-currencies at your own peril.

 

Let it Go's picture

If you are not up to speed on this subject it would be wise to get there. A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. These are all the rage. Recently I came across the term ICO for the first time and quickly found it stood for initial coin offering.

This whole sector of investing is on fire but even as values surge warnings are coming out of fraud and other issues. The article below is aimed at answering questions about this sector.

 http://Bitcoin, Cyptocurrencies, And ICOs html

Bopper09's picture

I had been thinking the SDR would use the Yuan, newly thrown into their basket to try be the next world currency when the dollar burns.  But now I see they've started Acchain coin as a digital currency.  Any bets they'll be trying to use that next year?