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ECON Should the Fed Create ‘FedCoin’ to Rival Bitcoin? A Former Top Official Says ‘Maybe’
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  1. #1
    Join Date
    Mar 2005

    1 Should the Fed Create ‘FedCoin’ to Rival Bitcoin? A Former Top Official Says ‘Maybe’

    Many enthusiasts of Bitcoin and other cryptocurrencies are motivated by deep skepticism of the central banks that control the world’s money supply.

    But what if central banks themselves entered the game? What would happen if the Federal Reserve, or the European Central Bank or the Bank of Japan used blockchain technology to create their own virtual currencies? Besides, that is, having some cryptocurrency fans’ heads explode?

    A former Fed governor — who was also a finalist to lead the central bank — thinks the idea deserves serious consideration.

    “Most central banks have a view that these crypto-assets are clever, like guys in the garage did it and it’s kind of cool, or risky,” given the potential investor losses and widespread fraud, said Kevin Warsh, who was a governor at the Fed from 2006 to 2011 and was a top contender to become its chairman late last year when President Trump instead appointed Jerome Powell.

    If he had returned to the Fed, Mr. Warsh said, he would have appointed a team “to think about the Fed creating FedCoin, where we would bring legal activities into a digital coin.”

    “Not that it would supplant and replace cash,” he said, “but it would be a pretty effective way when the next crisis happens for us to maybe conduct monetary policy.”

    He added that blockchain technology, which allows reliable, decentralized record keeping of transactions, could be useful in the payment systems operated by the Fed, which enable the transfer of trillions of dollars between banks.

    “It strikes me that a central bank digital currency might have a role to play there,” Mr. Warsh, who is now a distinguished visiting fellow at the Hoover Institution at Stanford, told several reporters Thursday evening.

    Some central banks are already doing work in this vein, including the Monetary Authority of Singapore and the Bank of England. And Mr. Powell acknowledged the potential applications in his confirmation hearing for the Fed chairmanship in November, saying, “We actually look at blockchain as something that may have significant applications in the wholesale payments part of the economy.”

    It would be quite a twist if a technology whose most ardent fans are motivated by distrust of central banks became a key tool for those banks.

    But it would address some of the concerns connected to Bitcoin and its many privately created rivals. To the degree that the value of existing cryptocurrencies fluctuates wildly, they are ill-suited as a medium of exchange. Central banks have spent hundreds of years learning how to keep the value of money stable.

    And to the degree Bitcoin and the like facilitate tax evasion, money laundering and fraud, they will be a target of global law enforcement. Central banks are used to building systems that allow enforcement of those laws.

    It’s clear that central banks weighing use of blockchain technology don’t share the more anarchist impulses of some of the most die-hard cryptocurrency enthusiasts. But there may be more commonality than it might seem. As Mr. Warsh argues, if people really do believe that digital currencies in some form are the future of money, it would behoove central banks to treat them as more than a novelty.

    “Congress gave the Fed a monopoly over money,” Mr. Warsh said. “And if the next generation of cryptocurrencies look more like money and less like gold — and have less volatility associated with them so they would be not just a speculative asset but could be a reliable unit of account — as a purely defensive matter I wouldn’t want somebody to take that monopoly from me.”

    In other words, if cryptocurrency enthusiasts are correct that this technology could become a better way of carrying out even routine transactions, the Fed and its counterparts are the institutions that have the most to lose.
    What is the lake of fire? What is it's purpose? Is the lake of fire eternal hell? Is there any hope of escape for those cast into this lake?

  2. #2
    Join Date
    Jul 2005
    Happy on the mountain
    Sure, why not? The Fed excels at counterfeit money.
    The wonder of our time isn’t how angry we are at politics and politicians; it’s how little we’ve done about it. - Fran Porretto

  3. #3
    Join Date
    Oct 2014
    Southwest (enjoy it!)
    If the gov wanted to go to a cashless society then I would think a government cryptocurrency would be a logical step.

  4. #4
    Backed by the same thing the FRN is? Sure. Both have the same value.
    Repeal the 15th
    Rewrite the 14th
    We Must Secure the Existance of Our People and a Future for White Children
    Make America Confederate Again
    2020 Is Going To Be A ClusterF*ck

  5. #5
    Join Date
    Sep 2005
    "What if"? It's a f----ing lock. This must just be a "put the spotlight on this toe we're dipping in" while in the dark around the corner they're busy busy busy and much further ahead.

    I've been in the cryptocurrency/digital currency/mobile money space for a long time, and have sat in UN agency meetings on the topic, and it's coming. They'll take the best features -- fast clearing, ability to handle micropayments, no production/reclamation costs for bills and coins, etc. -- and LOSE the awkwardness with capital controls.

    They've been studying this closely and trying to learn from others' growing pains. It is in no way a "Gee whiz, that shore seems interesting, maybe we should look at it" activity.

  6. #6
    Join Date
    May 2001
    Behind Enemy Lines

    Yooooooouuuuuuuu betcha.....

  7. #7
    Join Date
    Jul 2001
    "outside the box"
    What if the United States (as opposed to the Fed Res) issued their own electronic currency.

    That would be completely radical game changer
    "whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness"

  8. #8
    Join Date
    Sep 2007
    I thought they already did. Look it up.

  9. #9
    Join Date
    Oct 2014
    Southwest (enjoy it!)
    On the other hand it would have to be an endless electronic currency. One they could make more and more of as they needed it. An endless supply. You know like they do now.

  10. #10
    Join Date
    Aug 2007
    Hill Country Texas
    The FED needs to concentrate on the fiat currency already under its control
    Tax the rich, feed the poor, til there are, rich no more - Ten Years After
    Surely you're not saying we have the resources to save the poor from their lot. -JCSS
    Friend, you cannot legislate the poor into freedom by legislating the wealthy out of freedom. And what one person receives without working for, another person must work for without receiving. The government can't give to anybody anything that the government does not first take from somebody.

  11. #11

    The only value in bitcoin is that it cannot endlessly be created out of thing air, and that gobt cannot control it.

    yes, why not just let the fed hold your wallet and distribute the money as they see fit, kinda like the tax man does now.


    My family & clan are my country.

  12. #12
    Join Date
    Feb 2015
    Ozarks, Roaming
    A little side note...

    But it would address some of the concerns connected to Bitcoin and its many privately created rivals. To the degree that the value of existing cryptocurrencies fluctuates wildly, they are ill-suited as a medium of exchange. Central banks have spent hundreds of years learning how to keep the value of money stable.
    Most think of 'a stable value of money' as a straight line.
    A horizontal straight line.

    The fed thinks different:

    Just how many people can recognize theft, when they see it.?

    Someone once said that not one man in a million...
    Resist Or Submit.
    It is too late, for words...



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