Cryptocurrencies will die, and digital money from central banks will become a new challenge for society

In the future, cryptocurrencies will disappear from the face of the global economy, and the traditional financial policies will be replaced by digital money from central banks. Harvard University professor Kenneth Rogoff is sure of this.

He argues that cryptocurrencies and Bitcoin, in particular, are interesting to the community as long as they are decentralized and not amenable to legislative regulation. But this trend is changing rapidly. More and more countries are saying that the popularization of cryptocurrencies contributes to the financing of terrorism or money laundering. Already today, attempts are being made to regulate the circulation of cryptocurrency, as well as ordinary fiat money. As soon as Bitcoin and other cryptocoins fall under central regulation, this digital asset will cease to be interesting and will simply die.

The situation is completely different with digital currencies issued by the Central banks of countries that have clear regulation. The future of the world and the financial system lies in honest and open data, so digital currencies can really change the monetary policy of both individual countries and the world as a whole. Today, China is already working on the full launch of the digital renminbi, which will be used domestically. In this regard, there are opinions that digital currencies will weaken the influence of the dollar and strengthen the Chinese currency in the market.

According to Professor Rogoff, the opposite trend is now observed: the dollar is constantly strengthening. He wrote an article in which he described in detail how the digitalization of the economy plays into the hands of the US dollar. Creating a digital currency is not enough; you need to strengthen it.

For example, the digital yuan can really compete with private cryptocurrencies, such as Bitcoin, because the value of the yuan is guaranteed by the second strongest economy in the world. Of course, the same Bitcoin can be used for individual purchases, but this is not liquid. If a country, such as China or any other, says that it will use digital money in the same way as paper money, then this indicates possible liquidity. Only in this case, digital currencies can really compete with the dollar, but then again, enough time must pass for the digital yuan to become as familiar as the paper one.

Will central banks become independent – Recently, some governments have proposed that central banks become independent. According to Professor Rogoff, this is the best initiative that could be dictated by the country’s leadership in terms of stabilizing the economy. Indeed, in many respects the financial situation in the country depends on the political one, and this may hinder the development of the economy or, conversely, lead to its decline.

According to Professor Rogoff, giving central banks independence will help make the economy more efficient. After all, today politicians and economists are chosen by ordinary people, not the Central Bank, some politicians have no idea how to manage money: they simply distribute them to the right and left, not understanding how the economy works.

On the other hand, the idea of ​​returning the Central Bank to government control and using it as a money printing press has long been debated in America. The money received is planned to be spent on social programs. According to Rogoff, this approach is not the right one. It is much more efficient to raise taxes for those who earn more, and lower tax rates for those who earn less, and redistribute the resulting amount to the needs of the state. It is foolish to print more money and give it to everyone.

digital money

In Russia (2015 year) the Central Bank just gained great independence and decided to switch to a floating exchange rate. This step saved the country from collapse and ruin, which was noted in 1998. In the same 2015, the Central Bank of Russia was named the best in the world. This just indicates a correctly chosen policy of economists.

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