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- Leading banks are reportedly panicking over central bank digital currency (CBDC), despite many key players highlighting their perceived benefits.
- A former finance minister and Economics Professor details the concerns of JP Morgan and TBTF Banks that CBDCs might render useless in the future.
While CBDCs might be a major game changer for different countries and their governments, especially as traditional digital currencies are notably volatile, banks are not very welcoming of these crypto assets.
Yanis Varoufakis, a former finance minister of Greece and Professor of Economics at the University of Athens has detailed the worries of major banks. The most pressing at the time seems to be centered around Central Bank digital currencies (CBDCs) and the threats they pose to banks. Varoufakis compares their worries to that of cigarette companies that were notably panicking over increased smoking restrictions.
The Economics Professor asserted;
Once upon a time, the greed of tobacco companies was channeled through libertarian outrage over the restriction of smokers’ freedom to choose cancer. Today, the outrage is serving the interests of bankers panicking at the prospect of central bank digital currencies.
A Fed CBDC could hinder the growth of JP Morgan and other Too-Big-To-Fail banks, as the services of these banks might no longer be required by their customers. With services like “holding deposits, processing payments, and so on – ‘disintermediated,’ they (banks) would suddenly be unable to hold societies, hostage.” The Economist remarked.
CBDCs can still curb major global taxation issues, Varoufakis reckons
Varoufakis went on to reveal that there is still space for the central bank digital currency (CBDC) to thrive. Although a large number of critics have made known their worries and concerns about CBDCs, Varoufakis maintains that these forms of digital assets are not all bad.
He makes a case for CBDCs by taking into consideration the current state of the global banking sector and the dangers it poses to customers. He insists that the CBDC industry can combat some of the issues including privacy-related ones, that the banking system struggles with.
Should the CBDC market prioritize democracy, tax evasion could be a thing of the past, as a more democratic environment will allow for the process of tax collection to be easier to navigate. In addition, deflation can also be tackled, Varoufakis remarked.
The system that manages Fed accounts can be made totally anonymous (just as crypto accounts are anonymous and identified by a long string of numbers) while a separate system supervised by relevant authorities can check for illicit activity such as tax evasion and money laundering. Thus, a proper and democratically controlled CBDC rollout can bring the combined benefits of strengthening tax collection, fighting deflation, and enhancing protection against Big Brother (and his many little brothers).
