The central bank of central banks, aka bank for international settlements (BIS), is very interested in “Stablecoins“. His latest paper on the subject is entitled ” Stablecoins: risks, potential and regulation “. A title that does not really bode well as we will see.
One Stablecoin to rule them all
From the creation of Bitcoin (BTC) in 2009, to the emergence of stablecoins such as Paxos Standard, Tether, TrueUSD or USD Coin, to Facebook’s Libra project in 2019, the BIS warns that ” these technological challengesues ”(not to say threats) must be regulated.
The host bank of the central bank governors ‘conclave argues that while Bitcoin has not become an alternative to states’ monetary arrangements, stablecoins, on the other hand, have a ” challenge “.
The BIS, however, sees a good eye certain properties of stablecoins such as “integrated monitoring” and being able to “program” the currency. Programmable money would, for example, make it possible to prohibit certain purchases from certain people or even to establish what is called “melting money”. That is, a currency that disappears after a certain time if it has not been spent …
“Governments could use “programmable money” (stablecoin) to limit how social assistance can be spent. For example only for groceries, or by making the money “expire” after a certain period.”
Mass surveillance, end of cash and control of our spending … How could the Chinese model of society suddenly become the example to follow for the BIS? … #GreatReset
The BIS continues by looking at libra and casually gives its definition of stablecoin:
” In the current debate, a stablecoin can be defined as a cryptocurrency that keeps a stable value against a specific asset, or a basket of assets. “
This definition will obviously recall the SDR (Special Drawing Right) the IMF, which is also a currency backed by a “basket” of currencies and whose composition is revised every five years. The SDR basket weight is currently 41.73% Dollar, 30.93% Euro, 10.92% Yuan (China), 8.33% Yen and 8.09% Pound Sterling.
We specify this because even if the BIS paper makes no reference to the SDR, it has close links with the IMF which has always nurtured the ambition to replace the petrodollar with this SDR. The latter has been gathering dust since 1969 because the United States (veto right) wants to continue to benefit from the exorbitant privilege of the dollar. This right of veto is a flaw that the Bitcoin which is absolutely “permissionless” (no transaction can be blocked). Note in this regard that Iran has already made Bitcoin a reserve asset of its central bank … End of the parenthesis.
The BIS appears to be concerned that Project Libra could easily achieve mass adoption and suggests that “governments” themselves embrace the innovation. Implied: the creation of CBDC (Central Bank Digital Currency).
But Zuck is moving quickly. Despite a rather hostile US Congress, libra will finally be launched in January 2021. The founder of facebook has probably obtained the green light by agreeing that his stablecoin be backed only by the dollar. Exit the euro, the yen, the pound and the Singaporean dollar.
That being said, the libra white paper still invites all central banks to use the Libra network once they have established their CBDCs. Put another way, libra has the ambition to become the SWIFT network of stablecoins, which grieves the current guardians of the temple…
The paper does not mention the word “Blockchain” and prefers to talk about DLT (Distributed Ledger Technology). And still happy because a DLT does not have a blockchain … There are still limits to the amalgamation with the noble Bitcoin …
The blockchain is a technology that makes it possible to keep track of a set of transactions, in a decentralized manner, thanks to a proof of work (mining) process which ultimately materializes in a chain of blocks. Decentralization is the cornerstone of Bitcoin and obviously not part of central bank plans.
The big advantage of DLT for the BIS is that it can track all transactions in real time, like a mass surveillance tool. The BRI even explains bluntly that we could integrate all this into a digital identity system managed by the private sector …
We here we come back to Bill Gates’ ID2020 project which aims to tighten its grip on the internet by eliminating anonymity. The goal is that we all have a digital identifier linked to our biometric data. Hello Big Brother.
ID2020 would, for example, allow payments by facial recognition or via a retinal scan. The World Food Program (UN) retinal scanner is called “Eyepay”. It is used in the Syrian refugee camps in Jordan. For example, in the Al-Zaatari camp in Mafraq, where the UN set up in 2016 a “blockchain” containing the biometric identities that must be confirmed in order to receive their daily humanitarian aid. Each refugee is credited to a “wallet” a certain amount that can only be spent inside the camp stores …
These refugee camps surrounded by barbed wire and guarded by the army are now called “liveable cities” or “smart cities” … Everyone will appreciate the comparison.
BRI vs Bitcoin
The paper obviously does not praise the Bitcoin which is the antithesis of stablecoins and other CBDCs. They will try to hasten their adoption by distrubing them in the form of aid. This will not be long in coming given the immense damage the containment has done to the economy. Isn’t that the goal of all social engineering: to make the people ask for what we want them to accept?
France is ready on this side since there is now a single file gathering all the biometric data of the French. It is the famous TES file (Secured Electronic Titles) nicknamed the “honest people file” that will undoubtedly be at the heart of a European CBDC.…
” Stablecoins were born from the ashes of the 2018 cryptocurrency bubble. After the last high-profile speculative bubble, it became clear that the high volatility in the value of cryptocurrencies was compromising their use as a means of payment and a store of value. […] Initially, stablecoins came over Bitcoin’s failure to serve as a means of payment. “
These statements are obviously of aberrant bad faith. Yes, Bitcoin is volatile. How could it be otherwise since it doesn’t even weigh $ 400 billion. For comparison, $ 5 trillion is traded every day on the Forex (foreign exchange market)!
The problem of volatility will go away when the 21 million Bitcoins are worth as much as all the gold in the world. That day a single Bitcoin will be worth half a million dollars … Who cares about the volatility of a currency if it keeps increasing in value over time? To say that Bitcoin is not a store of value flies in the face.
What is the BRI looking for?
It appears after reading these 30 pages that the BIS does not seem not very enthusiastic about the emergence of global stablecoins like libra. The central bank is probably afraid of losing its authority because it should be remembered that it is the bank that sets the banking rules. The famous “Basel rules” for connoisseurs.
” Regardless of their size, the digital and borderless nature of stablecoins will raise questions of cross-border coordination. It will be essential to put in place regulations and supervision tools. […] The tools must come from various experiences, for example taking the form of a private / public cooperative cooperation (such as SWIFT, CLS and Euroclear). “
We can feel here that Bankers are overwhelmed by tech and thatThe SWIFT network will soon be obsolete. The BIS is trying to have a say but it is not certain that Mark Zuckerberg needs them …
In any case, this is the impression one gets when reading the conclusion:
” Overall, it is uncertain whether stablecoins are necessary […]. Although a digital representation of currency holds great promise for some applications, CBDCs could offer the same benefits without certain drawbacks.. “
The BIS is wary of Mark Zuckerberg’s boarding, but does not hesitate to use this competition to promote the CBDC. That is to say a prelude to the end of cash that is disguised as innovation against a background of amalgamation with Bitcoin.
Bitcoin is the already existing solution allowing international payments without fear of being under embargo unlike the SWIFT network. It is also an escape from the dystopia of a totalitarian society without an anonymous means of payment.