Digital currencies
Regierungen sehen sich in ihrer geldpolitischen Souveränität durch digitale Währungen bedroht. Wie ließe sich ein Verlust ihrer Kontrolle vermeiden?
Aserious battle is brewing on the world’s financial markets. And the subject of this battle is nothing less than control of the world’s money, monetary systems and monetary policy.
In one corner are the world’s major governments and central banks, which are desperate not to lose their quasimonopoly control of money in their economies. In the other corner is a collection of digital assets/currencies and trading platforms covered by the term “Defi” (decentralized finance).
The best-known decentralized digital asset is the cryptocurrency bitcoin. “Crypto-” means “hidden” or “secret”, and one attraction of such assets is that they provide a high degree of anonymity. The Financial Times reported recently that monero is now becoming the cryptocurrency of choice for ransomware gangs — criminals who demand ransoms to unlock websites that they have hijacked — because monero offers even more anonymity than bitcoin.
Another criticism of cryptocurrencies is that their value is highly unstable. The value of one bitcoin, for example, rose from around $3,000 in December 2018 to nearly $65,000 earlier this year, before falling to under $30,000. The dramatic fall was partly in response to comments made by Tesla boss Elon Musk about the environmental impact of the computer activity that goes into producing bitcoin and the clampdown by the Chinese government on the currency’s production and trading. On the other hand, El Salvador recently became the first country to adopt bitcoin as legal tender. Other countries with traditionally unstable currencies may follow.
Most governments are suspicious of cryptocurrencies, however. They worry that they will be used to finance illegal activities such as drug dealing or terrorism. And they fear that if such currencies are widely adopted — including the Facebook-backed Diem, a “stablecoin”, whose value is linked to the US dollar — governments will lose their monetary sovereignty.
This explains why many governments are both tightening the regulation of cryptocurrencies and considering issuing official Central Bank Digital Currencies (CBDCS). In 2020, the Bahamas became the first country to do so, with its “sand dollar”. China is trialling an e-yuan, the US is looking into an e-dollar, the EU wants to have a digital euro by 2025 and the Bank of England’s possible CBDC has, not surprisingly, been nicknamed “Britcoin”.
Official e-currencies, or “govcoins”, would allow people to hold accounts directly with central banks rather than with commercial banks. This could increase financial security for customers and reduce the costs of financial transactions. But CBDCS would also have a serious impact on the banking sector and potentially increase government control over individuals’ finances — something that decentralized digital assets aim to reduce.
One thing is certain: the battle over digital currencies in the coming years will be a spectacular and significant one.