Electronic Swiss franc? Not so fast, government says

submitted by magnora7 from reuters.com

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[–]magnora7[S] 4 insightful - 1 fun4 insightful - 0 fun5 insightful - 1 fun -  (6 children)

The Swiss government took a downbeat view of creating a central bank digital currency for public use, saying it could do more harm than good and destabilize the financial system.

“Universally accessible central bank digital currency would bring no additional benefits for Switzerland at present. Instead, it would give rise to new risks, especially with regard to financial stability,” the cabinet said after meeting on Friday.

Interesting. Meanwhile China is just about to launch their own digital yuan

[–]Tiwaking 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (5 children)

China's only viable financial expansion choice is a crypto-currency. They bet on making the Yuan a global reserve currency before realizing they had made a critical financial error.

Unfortunately with crypto.....they're about to to make their second critical financial error.

[–]magnora7[S] 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (4 children)

They bet on making the Yuan a global reserve currency before realizing they had made a critical financial error.

Interesting. What's the error they made?

[–]Tiwaking 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (3 children)

Technically being a global reserve currency is a good thing, as it allows access for everyone to your economy. But China's economy is:

  1. Completely closed - You can only get Yuan from China.
  2. Debt based - They own quite a bit of American debt.

If American Dollars devalue, their currency devalues. If they recall their debt it will devalue the American Dollar, which devalues their currency. Because China keep manipulating their own currency (by devaluing it), it throws all loan/repayment balances out of wack.

And since you cant buy Yuan directly, it means you cant assess the true value of the Yuan. China shouldnt have wasted all its money on Africa and Ghost Cities

[–]magnora7[S] 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (2 children)

Interesting points. However I might contend that the US also has points 1 and 2 for the USD, as you can only get it from the Federal Reserve and it's also debt-backed, yet it managed to become the world reserve currency (mostly through the petrodollar system which requires all oil trades to be in USD, in exchange for US military protection and/or oil access). This creates a large reserve holding in central banks across the world. So I guess I don't quite see the error clearly.

I agree about the ghost cities, those are very interesting to me. It seems to come from the idea that real-estate is the perfect place to park your investment money. Whereas in the US, people traditionally park it in the stock market (as well as real estate). So the US has a stock market bubble, and china has a housing bubble. Two sides of the same coin, imo.

[–]Tiwaking 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

Interesting points. However I might contend that the US also has points 1 and 2 for the USD, as you can only get it from the Federal Reserve and it's also debt-backed, yet it managed to become the world reserve currency (mostly through the petrodollar system which requires all oil trades to be in USD, in exchange for US military protection and/or oil access).

There is a rule. It goes: If you cant be the best, be the first, and if you cant be the best OR first, be the fastest.

America's Military Industrial Complex + Petro-Dollar = First. And probably fastest too.

p.s. I love cryptocurrency <3 <3 <3

[–]magnora7[S] 2 insightful - 2 fun2 insightful - 1 fun3 insightful - 2 fun -  (0 children)

Interesting rule, it makes sense to me and explains a lot.