Cryptocurrencies had a great year in 2021. In this period, we have seen the market go from being classified as a billion-dollar economy into a trillion-dollar economy. Aside from that, cryptocurrencies are gaining visibility in the mainstream world with, for example, El Salvador's adoption of Bitcoin as the official digital currency. As a result, investors are looking for the "new Bitcoin" on the market, hoping to find a great alternative in so-called altcoins. Unfortunately, many traders value an altcoin exclusively…
Former Goldman Sachs chief Raoul Pal says CBDCs are at the forefront of new banking policies. Pal, in a series of tweets, referenced several sources to buttress his point.
Biggest financial overhaul in history?
The potentials of digital currencies and cross border payments will be the major topics at the conference. Pal further added that the Bank of England (BOE) was the first to consider CBDCs. Mark Carney, a director at the BOE, had suggested CBDC as an alternative to the dollar. Carney had asserted using CBDCs would ensure a change without affecting the economy.
Governments creating policies for CBDCs
Pal also believes governments across the world are creating policies for digital assets. He highlighted the US allowing for bank custody of digital assets, including Bitcoin.
CBDCs would be associated with a part of X-border payments with more features. Central Banks will be able to circumvent fiscal and monetary systems. Taxes will be easier to collect from businesses without third-party intermediaries. Also, Multi-interest rates would be set directly from the regulatory bank. This means that Central Banks will create a defined cost of capital for individuals and firms.
The integration of CBDCs would also push behavioral economics to the forefront based on big data and real-time analysis. CBDCs applications would enable governments to navigate financial difficulties without triggering an economic recession.
This would likely come as a detriment to the fiat currency system and is a risk several governments will take. Pal believes that there would be huge benefits to the new system of finance powered by CBDCs.
In conclusion, Pal praised the positive impact Bitcoin had brought on the financial sector. The success of the leading coin has led to the adoption of cryptocurrencies globally.