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tl;dr
Perhaps the bureaucrats haven’t properly thought through Central Bank Digital Currencies (CBDCs).
Market Snap
Market Wrap
Markets are expecting yields to climb again tomorrow back towards 4% as the risk of a 100bp rise at the next meeting grows. UK pension funds that have over-leveraged themselves with LDI (liability driven investing) are facing a nervous week — we are close to the pain point where selling begets more selling as margin calls are made against this derivatives exposure.
Curious Cryptos’ Commentary — Central Bank Digital Currencies (CBDCs)
The CCC has been warning for a long time of the potential dangers of CBDCs, and how they might (will?) infringe on our privacy and property rights.
I have tried to be level and rational about the discussion. I haven’t resorted to unjustifiable claims and headlines, unlike everything one read in the popular press about market turmoil recently, turmoil that simply did not exist. And if anyone still believes it did, please send me just one market example backed with trading data facts, because I cannot find it.
Meanwhile, I came across this quote yesterday about CBDCs. It is far more hard hitting than my commentary, and way more eloquent. It is worth reading. Over to you, Seth Hertlein, Global Head of Policy at Ledger:
“CBDCs is (sic) the most powerful tool for human oppression yet devised by man. CBDCs gives (sic) central governments direct visibility and control over users’ every transaction. Say the wrong thing on social media; your wallet is frozen. Attend a public demonstration; your wallet is drained. Make too much money; congrats — your balance now has negative interest rates. You’d like to purchase [meat/cigarettes/alcohol/a firearm/a book/a car/a flight/birth control/an abortion/etc.]; sorry, purchase denied. You’d like to send [X amount] to a [friend/family/charity/etc.]; sorry, please visit your local government office for processing. Paired with other emerging technologies like artificial intelligence, facial recognition, blockchain analytics, and social credit scoring, CBDCs represent not only the death of privacy but also, for the first time in the history, the power of governments to completely subjugate their populations.”
Now I know you are scared.
Curious Cryptos’ Commentary — Central Bank Digital Currencies (CBDCs)
There is an alternative view (ht Guy Hayward) which posits that the introduction of CBDCs will allow people to get comfortable with the concept of cryptos, hence leading to greater adoption of cryptos as public recognition of the privacy invasion of CBDCs grows, and public recognition of the value proposition of private blockchains grows.
We cannot stop the introduction of CBDCs, and we cannot stop governments from using them to invade our personal space.
But it will be the most beautiful irony if Guy is right, and this transparent attempt by governments to gain access to our personal financial details results in greater privacy all round.
That will be a fabulous outcome.
Compliance Stuff
Trigger alert warning — if any reader feels that they are “literally shaking” (as claimed by a Durham student who cannot emotionally cope with a different point of view) after reading my commentary, then I can only suggest you don’t read, or don’t shake. It’s up to you.
Cryptos — none of my commentary should be seen as a recommendation to get involved in cryptos. I might be talking complete nonsense without knowing it. Any crypto investments must be viewed as extremely high risk and treated as if they are worth zero until sold.
Stocks — just to make it clear this is not a stock advisory service. The CCC team does not provide financial advice in any way at all. Any reference to asset prices in this commentary are there to simply give context to the commentary and to give colour to the performance of certain stocks related to cryptos.
For the avoidance of doubt, this newsletter is not an incitement to buy cryptos, buy stocks, or even to sell family members in the hope of buying cryptos or stocks.
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