Digital currency projects of central banks are rapidly turning into reality. China reportedly expanded a pilot program for the digital yuan this month.
While the US has barely begun to even think about a digital dollar; Raghuram Rajan, the former head of the Central Bank of India, opened up the discussion of the potential impact of these currencies, saying that Bitcoin and Facebook’s Libra cryptocurrency could be “in competition” with the center.
“I would like to think that Bitcoin and Libra are also competing with the central bank digital currency,” Rajan, who served as the chief economist of the International Monetary Fund before becoming president of the central bank of India, told CNBC. said.
Central bank digital currencies, sometimes referred to as CBDCs, are expected to work just like regular cryptocurrencies and banknotes issued by central banks, but are entirely available online as the U.S. Federal Reserve potentially issues digital dollars through Fed accounts.
The race to create a working central bank digital currency began last year when Facebook announced the Libra cryptocurrency, but the social media giant has had to cut back on its ambitious plans after central bank executives around the world opposed the idea.
Explaining that Facebook “wants to be a world”, Rajan; “The concern with Libra is that on the one hand they are very ambitious about what they want to do but there was much uncertainty about what the security measures would be,” he said.
“You cannot attempt anything without telling anyone how the data will be protected or what security mechanisms to use.”
“This is the worst prospect for central banks: something that will take over the world, but we don’t have a strong confidence that the risks will be contained.”
Bitcoin Will Act As Store Of Value
Rajan worries that competition among central banks will drive CBDC development for years to come, with countries’ rival currencies replacing their own currencies if they do not keep up. However, he states that in this case, private currencies such as Bitcoin and Libra will continue to exist.
“Different private currencies will do different things and Bitcoin can have a forward value just like a store of value,” says Rajan. While Facebook’s Libra is perhaps used to “make transactions”; Bitcoin will be used as a “speculative asset”.
Such scenarios are a view debated by many in the Bitcoin and cryptocurrency community. Bitcoin investors often advocate this asset as “digital gold”, and investors often flock to Bitcoin in times of increased risk.
Rajan also expressed concern that CBDCs could result in government over-reach. He continued as follows:
“The nice thing about the money we have is that it is anonymous. Even if you’re not doing anything illegal, do governments need to know the details of every transaction you take? ”
Bitcoin’s Status in Turkish Investors
Popular economist Raoul Pal, he stated that there is a relationship between the crypto-currency market developments and Turkey. According to Pal, Turkish investors consider Bitcoin (BTC) as an alternative investment tool.
The dollar’s weakening phase may show signs of reversal that could result in an increase in volatility. However, while Turkish investors are looking for an alternative to gold, it is stated that the meltdown in the Turkish lira revitalizes Bitcoin.
There is currently no engine in global growth. Stating that with the uncertainty around more recovery in the USA and Europe, a W-shaped recovery can be seen as a result, Pal evaluated the world economy. Real Vision CEO Raoul Pal said during today’s Daily Briefing that a number of technical indicators show it is time to reverse the dollar’s weakening phase.
This Phase of the Dollar is Crucial
Pal said that the reversal signals made many other markets somewhat nervous, including gold, some stocks, and some foreign stock markets. “It is very important what the dollar does from here,” Pal said. If it sharpens quickly, it can increase the volatility, due to the opposite size of the positions.
Pal thinks we will see significant volatility in the next two to three weeks as the breadth of the stock market decreases, the dollar strengthens, we are in a period of no recovery, and the uncertainty increases dramatically.