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For this episode of Fed Watch Bitcoin Magazine, my cohost Christian Keroles and I are going into specifics on the European Central Bank (ECB) plans in terms of its digital euro. We are told in the media that central banks are going to release Central Bank Digital Currency (CBDCs) and that this will have damaging economic effects. However, on this podcast episode we get our information directly from the source.
First, we have to answer a critical question: Is digital euro likely to launch in reality and why? (In future chapters we will cover the side effects of CBDCs, if any.)
On November 30, 2020, ECB president Christine Lagarde released a blog post detailing the ECB’s current thoughts on money and how digital euro, or CBDC, fits into its plans. I spoke about this on my recent episode of Bitcoin & Markets, and Keroles wanted to explore the idea of ECB concerns in particular, because his mind seems to be very concerned about financial sovereignty.
That term, “financial sovereignty,” which has been raised many times is Lagarde’s blogpost in the context of why the ECB feels the need to follow the FAW. This contrasts with statements by Federal Reserve Chairman Jerome Powell, who has focused on patience and conservatism instead of concerns about financial sovereignty. Why is this?
Most likely, this is because there are already digital stablecoins, which operate in a similar way to how a digital euro would operate in the market. But there is a big problem in the free-market offerings of these stables from the ECB’s vantage point: they are based on 99 percent of US dollars. If the ECB did not act, the market could avoid using the euro entirely in favor of digital dollars. That is a daunting prospect for the ECB, so it must provide that option for the market, and perhaps even require its use in some cases to maintain the global position of the euro.
This chapter also covered MicroStrategy’s recent “bonds for bitcoin” offering. Listen to find out if these are the first signs of the long-awaited “speculative attack” on fiat by bitcoin, and what to watch for as this move gets the attention of regulators.
We also discussed jurisdictional arbitration at length. How does bitcoin enable jurisdictional arbitration even within regions such as the United States or European countries? Of course, as good bitcoiners, this leads us to a cosmic back and forth regarding citadel locations, and the best place to live in the future from a freedom and economic perspective.
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