This week’s Crypto Wrap KnovaWave & Meta Johnny discuss a big week for crypto, the collapse of Bitcoin and Ethereum and alt coins heads us off. They discuss the use Of Bitcoin in South America and The US Fed’s paper on CBDC. The story behind the banning of Crypto in Russia and China as geopolitical tension hits fever pitch.
Money and Payments: The U.S. Dollar in the Age of Digital Transformation
For a nation’s economy to function effectively, its citizens must have confidence in its money and payment services. The Federal Reserve, as the nation’s central bank, works to maintain the public’s confidence by fostering monetary stability, financial stability, and a safe and efficient payment system.
This paper is the first step in a public discussion between the Federal Reserve and stakeholders about central bank digital currencies (CBDCs). For the purpose of this paper, a CBDC is defined as a digital liability of a central bank that is widely available to the general public. In this respect, it is analogous to a digital form of paper money. The paper has been designed to foster a broad and transparent public dialogue about CBDCs in general, and about the potential benefits and risks of a U.S. CBDC. The paper is not intended to advance any specific policy outcome, nor is it intended
to signal that the Federal Reserve will make any imminent decisions about the appropriateness of issuing a U.S. CBDC.
Much discussion has been the loss of the power or impact on the US Dollar with the geopolitical missteps of the current and previous US Administrations and the advent of Bitcoin. The Fed addresses that awareness in the report.
Countries Where Bitcoin Adoption Is Being Considered
There have been significant moves in cryptocurrency of late. The Central Bank of Singapore, the Monetary Authority of Singapore is in the process of setting regulations in place encouraging cryptocurrency firms to operate in the island state. The move is to avoid “Singapore being left behind.” The Central Bank of Nigeria (CBN) launched the digital currency eNaira. The move followed Nigeria banning banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies in February 2021.
El Salvador became the first country to make bitcoin legal tender. El Salvador is planning to issue in 2022 $1 billion in bonds backed by bitcoin to attract crypto capital. The country plans to sell $1 billion in U.S. dollar-denominated 10-year bonds with a coupon of 6.5%. Half of that money would be used to buy bitcoin to hold for five years, and the rest would fund construction projects related to bitcoin.
El Salvador will issue the bond in partnership with Canadian digital assets infrastructure company Blockstream. The bonds would be issued on blockchain, the digital ledger that allows for trading without traditional intermediaries such as banks.
El Salvador’s President, Nayib Bukele and politicians from several Latin American countries have begun calling for the adoption of Bitcoin as legal tender. The motivation is inflation, a captive reliance on the U.S. dollar and to attract tech entrepreneurship.
In Paraguay Congressman Carlitos Rejala of Paraguay called for the nation to advance along with its new generation.
Congressman Gabriel Silva in Panama plans to propose similar action.
Down in Brazil, State Deputy for Rio Grande do Sul Fabio Ostermann and Federal Deputy of Brazil, Gilson Marques showed their support on twitter.
Senator Indira Kempis de I. of Mexico retweeted Tyler Winklevoss;s comment, “First they ignore you, then suddenly Paraguay, Argentina, Panama, Brazil, El Salvador, and Nicaragua embrace #Bitcoin.”
Source: KnovaWave Federal Reserve
From The TradersCommunity Research Desk