Global Government Banks Think They Should Take Over Cryptocurrency, Someday

How much of the world’s money is actually cash — paper bills, like you see in a bank heist movie?

Half, you might guess. Perhaps less.

Try 8%. Economists believe that of all the world’s paper money, just 8% is actually paper. The rest are digital signals on ledgers at banks and in businesses.

Which might lead one to believe that a cashless future bodes well for the idea of cryptocurrencies, entirely digital money that relies on a public ledger, the blockchain, to verify transactions.

Not so fast, says the world’s biggest global government banks, the Bank of International Settlements and the European Central Bank.

“Cryptocurrencies are poor imitations of money. Almost nobody prices goods in Bitcoin, few use them for payments, and, as a store of value, they are no better than gambling in a casino,” they said.

“Policymakers are rightly worried about consumer and investor abuses, as well as illicit use,” the banks’ leaders said in recent statement.

As such, Bitcoin and its many smaller cryptocurrency peers are “not the answer to the cashless economy,” they said.

The statement stressed that cryptocurrencies are mainly used for investment and speculation purposes and rarely for payments transactions for goods — much of the reason for international capital movement.

This fact makes Bitcoin useless as a viable currency, they argue.

It’s not a total loss, however. The rise of cryptocurrency has put good pressure on the international monetary system to improve, they wrote.

“Despite its many faults, Bitcoin has put the spotlight on an old failing of our current system: cross-border retail payments.”

“However, these payment channels are generally much slower, less transparent and way more expensive than domestic ones. Improvements here are the best way of rising to the Bitcoin challenge.”

Cryptocurrencies are created anonymously online, have volatile and unpredictable trading swings and are not regulated by any country, government or financial regulatory body.

Blockchain future

Blockchain technology, the underlying technology that allows for the anonymous creation and online public recording of cryptocurrency creation, has been praised by Bitcoin critics as the potential precursor of future cashless payment and transaction technologies.

The problem is that blockchain technology enables anonymity of those mining for Bitcoins. Also, cryptocurrencies are not regulated.

“These trends have sparked a discussion about whether central banks should issue their own digital coinage,” said the banks’ leaders.

The piece speculates that a central bank digital currency (CBDC) authority could be created to regulate future digital currencies created by evolved blockchain financial technologies.

The problem is that a banking authority for cryptocurrencies, unless introduced incrementally as the use of fiat currencies wanes, has the potential to catastrophically disrupt current financial system infrastructures.

“A CBDC for all would challenge the current model of banks taking customer deposits and using that money to fund the lending that helps drive the economy.”

“The consequences for bank business models and financial stability would need to be carefully parsed,” they wrote.

A central banking digital currency authority would demand identity verification of anyone creating such currencies, thus creating privacy issues.

Bitcoin and Gold Slaying Stocks: Why Not Own Both?

The Bitcoin vs. gold battle rages on as the two are best-performing assets of 2020. The price of gold is up 26% this year, while Bitcoin has soared 87% —

Companies Pile On Debt. Big Headaches Later for Investors?

How have companies handled the cash crunch during this pandemic? I came across an insightful in-depth research report this past week that had a few interesting charts on this. See

Potential Options Payoff in Post-Covid China Rebound

The Chinese economy is starting to show signs that it is rebounding better than other economies around the world. China was the first country that had to battle the COVID-19

Retirement Income Tip: Buy High-Yielding Dividend Stocks

Imagine a scenario where you can make money while you sleep. Sounds too good to be true, right? Enter high-yielding dividend stocks. Now, there are lots of stocks in the

Beat the S&P 500 with These Specific Stocks

Today I'm going to briefly discuss a major error that most stock market participants make on a regular basis and ways in which you can substantially increase your stock returns.

Iaccino: Dollar Down, Stocks Higher, Plus PayPal Meets Bitcoin

A renewal of federal stimulus on top of monetary stimulus after the election is likely to support the stock market, says Bob Iaccino, editor of the Stock Think Tank. The

investor or pay off debt

Invest or Pay Off Debt? In a Pandemic, I’m a Stock Buyer

If you were to tell someone that you were putting any extra cash you had into the market instead of paying off debt, they might think you have lost your

bitcoin mass adoption

Bitcoin Mass Adoption Can’t Be Far Off — That Means Surging Demand

When you look at past technological developments — from the 19th century industrial revolution through the introduction of the telephone, personal computers, Internet, and smartphones — there is a typical

stocks overvalued

Is the Stock Market Overvalued? Not By This Measure

You many have heard the term “TINA” mentioned in various financial and investment commentaries in recent months. This is an acronym for “There is No Alternative.” It is built around a

clx options

Options Play: Take Advantage of Bearish Sentiment On Clorox (CLX)

We are in the middle of a global pandemic and one of the best weapons against the virus is cleaning surfaces with bleach. If we were to ask 100 people

This Predicts Bitcoin Price — and It’s Uncannily Accurate

Many investment advisors are beginning to recommend some exposure to Bitcoin (BTC) and some alternative (alt) coins, such as Ethereum (ETH). But the biggest hurdle for many analysts is how

retail spending

Retail Spending Shoots Higher, Suggesting Stocks Will Follow

Data released today by the U.S. Department of Commerce indicate that sales at U.S. retail stores rose sharply during September. Specifically, that data indicate that U.S. retail stores rose during