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The rollout of central bank digital currencies across the world is all but assured. Is there a place for banks, and could they become an unlikely ally for crypto?
In a blog post on the BitMEX cryptocurrency exchange site, where Hayes was the former founder and CEO, the newest post featured the title āPure evilā, and voiced Hayesā concerns over the impending imposition of central bank digital currencies (CBDCs) as the new currency issued by governments and central banks across the world.
Hayes believes that there is little chance that CBDCs will be stopped from being imposed by governments, given the general āapathyā shown by the majority, who have no problem with ādecid[ing] to voluntarily upload [their] lives onto social media platforms like Instagram and TikTok.ā
CBDCs to halt inflation?The crypto exchange founder said government thinking was that inflation could be tackled if they imposed CBDCs.
āI expect that the CBDC will enable the government to tackle this new kind of inflation with vigour, but to the great detriment of the people. Let us pray.ā
For Hayes, the type of inflation that the world is facing is really scary because it is affecting food and fuel the most.
āWeāre staring down a much scarier type of inflation today: food & fuel inflation. Itās the kind that brings everyone except the richest out into the streets ā and it is gradually tightening its already iron grip on all the worldās developed and developing countries.ā
The evilAccording to Hayes, the government will have unlimited powers to eradicate any movement that tries to protest against it by removing individualsā access to money.
āThe police inherit a new tool, the CBDC. Instead of carrying out overt acts against the protestors to stop the upcoming march on the capital, the police decide to ask Facebook, Twitter, Weibo and other platforms to hand over all data on anyone their algorithms believe were involved in the movement or sympathetic to it. On the days leading up the march, these individuals are completely frozen out of the financial system.ā
He explains:
āThe protestors and those who support them are thus unable to fill their cars up with gas, unable to purchase a bus, train, or plane ticket, unable to dine at a restaurant, unable to purchase food and water at the grocery store, and ultimately unable to organise effectivelyā
Will banks be sidelined?Even though the reckless lending behaviour of the banks has caused many problems for governments, the same governments have always felt compelled to step in and help, given the banksā importance to the financial system.
From Bank of International Settlements
However, with the rollout of CBDCs there are certain options as to which variety a government might choose.
With the Direct CBDC there would just be a direct line between each citizen and the central bank, therefore doing away with the need for any intermediary banks. For Hayes, this is the āpure evilā option.
However, according to Hayes, the āWholesaleā model is the one that is being adopted by governments so far, and it is the most likely one given that banks would still act as gatekeepers to the financial system and governments may lack the political will to take on the banks and take them out of the picture.
Bitcoin as a way outHayes is generally pessimistic on CBDCs, saying that he believes a Wholesale CBDC will be implemented by all major economies in order to attempt to combat inflation.
He is also pessimistic on the populationsā willingness to do anything about such an imposition, saying āgenpop is too busy liking the latest dance video on TikTok to wonder first why their physical cash disappeared.ā
In spite of all this, he does say that heās optimistic because he is able to buy bitcoin, which he calls the āsupreme antidoteā. However, he says that the window in which the population can still buy bitcoin is fast disappearing, and that āthe best day to have bought bitcoin is yesterday.ā
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.Ā
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