Say Goodbye to Banking as We Know It

[Accountsell]

China is poised to launch the first national digital currency. There will be no counting the disruption.  

So is China readying its own Bitcoin? Banish the thought.

It’s far bigger than that. Yes, just like any other cryptocurrency — or for that matter, cigarettes in prisoners-of-war camps — the upcoming digital yuan will be “tokenized” money. But the similarity ends there. The crypto yuan, which may be on offer as soon as 2020, will be fully backed by the central bank of the world’s second-largest economy, drawing its value from the Chinese state’s ability to impose taxes in perpetuity. Other national authorities are bound to embrace this powerful idea.    

Little is known about the digital yuan except that it’s been in the works for five years and Beijing is nearly ready to roll. The consensus is that the token will be a private blockchain, a peer-to-peer network for sharing information and validating transactions, with the People’s Bank of China in control of who gets to participate. To begin with, the currency will be supplied via the banking system and replace some part of physical cash. That won’t be hard, given the ubiquitous presence of Chinese QR code-based digital wallets such as Alipay and WeChat Pay.

It may start small, but the digital yuan can disrupt both traditional banking and the post-Bretton Woods system of floating exchange rates that the world has lived with since 1973. No wonder that for China, “blockchain and the yuan digital currency are a national strategic priority — almost at the level of the internet,” says Sanford C. Bernstein & Co. fintech analyst Gautam Chhugani.  

Ever since the advent of the 17th-century goldsmith-banker in London, the most crucial thing in banking has been the ledger, a repository of irrefutable records to establish trust in situations where it doesn’t exist. When Peter in Vancouver agrees to send money to Paul in Singapore, they’re forced to use a chain of interlinked intermediaries because there’s no ledger in the world with both of them on it. Blockchain’s distributed ledgers make trust irrelevant. Paul devises a secret code, and shares its encrypted version with Peter, who uses it to create a digital contract to pay Paul. A cumbersome and expensive network of correspondent banks becomes redundant, especially when it comes to the $124 trillion businesses move across borders annually. Imagine the productivity boost; picture the threat to lenders.

China isn’t the only one experimenting. Fast, cheap cross-border payment settlement is one application of JPMorgan Chase & Co.’s Quorum, an Ethereum-based platform on which the Monetary Authority of Singapore is running Project Ubin, an exploration into central bank digital money. These are early days, but if blockchain technology shows promise in handling a large number of transactions simultaneously, then digital currencies could become substitutes not just for physical cash but also for bank reserves.

That’s when the game changes. Reserves at a central bank are maintained by deposit-taking lenders. A digital yuan — or Singapore dollar or Indian rupee — could bypass this system and allow any holder of the currency to have a deposit at the central bank, potentially making the state the monopoly supplier of money to retail customers. As Agustin Carstens, the general manager at the Bank for International Settlement, noted recently, “If the central bank becomes everybody’s deposit-taker, it may find itself becoming everybody’s lender too.”

But why would central banks want to demote their own banking systems? One answer, looking at Europe and Japan, is that negative interest rates are doing that anyway. Lenders are starved of profit because while the central bank charges them for keeping money on deposit, they can’t as easily pass on those negative interest rates to their own depositors. If the global economy gets mired in long-term stagnation, official digital currencies will at least be an efficient way of monetary easing without involving banks.

The other, more concrete, reason may be that technological progress is making the status quo untenable. It’s no coincidence that China hastened its national cryptocurrency after Facebook Inc. announced the Libra project, which was touted as an alternative dollar. Perhaps that was fanciful, and the Libra has hit a wall of regulatory concerns. But if they’re offered like Spotify gift cards at the local 7-Eleven, there will be demand for tokens that are acceptable across borders, stable in value against baskets of national currencies, and can be used in global trade and investing. Someone in Silicon Valley will eventually succeed, blowing away the fig leaf of monetary sovereignty in emerging markets in the process.

The changes won’t end with banking and monetary arrangements. Token transactions will be pseudonymous: If the central bank wants to see who’s spending where, it can. Anonymity disappears when cash does. While that will make life difficult for money launderers and terrorists, it could also become a tool to punish political activism. Meanwhile, currency as a foreign policy weapon loses some sting. Pariah states will covet a crypto they can access by circumventing banks that are terrified of flouting Western sanctions. As Harvard University economist Kenneth Rogoff notes, technology “is on the verge of disrupting America’s ability to leverage faith in its currency to pursue its broader national interests.”

A roller-coaster decade — not just for for banking and money but also for privacy and politics — may just be beginning.

https://www.bloomberg.com/opinion/articles/2019-12-29/china-has-edge-over-silicon-valley-to-end-banking-as-we-know-it

....


According to this, china sped up development of its national digital crypto currency after facebook announced its libra plans and could release it in 2020.

One of the things that made america great was it being a previous hotbed of innovations and futuristic progress.

Today lawmakers appear determined to ensure america does everything within its power to oppose and obstruct innovations like bitcoin/blockchain/crypto.

While china and europe does the opposite. And so perhaps this represents a small microcosm of the paradigm shift taking place.

I already stopped using the banking systems only due to the blockchain tech.
I loved being with bitcoins and hence I have minimized my local transactions with the banking sectors.
This makes me feel confortable with my money and also no one has track on my money anymore.

[1715033419]

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[Clairvoyance]

There is all this buzz regarding big countries creating their own cryptocurrency. China, Russia and Japan to name a few, is already in their first stages. If the agenda of the local government is to have a centralized currency then they are already missing the point of having a cryptocurrency. Since it is too early to say if they will go full on implementation, we can expect further news regarding this over the course of a year or two. China's coin is very much sketchy for they are now testing social credit system

[Faxmate]

China is poised to launch the first national digital currency. There will be no counting the disruption.  

So is China readying its own Bitcoin? Banish the thought.

It’s far bigger than that. Yes, just like any other cryptocurrency — or for that matter, cigarettes in prisoners-of-war camps — the upcoming digital yuan will be “tokenized” money. But the similarity ends there. The crypto yuan, which may be on offer as soon as 2020, will be fully backed by the central bank of the world’s second-largest economy, drawing its value from the Chinese state’s ability to impose taxes in perpetuity. Other national authorities are bound to embrace this powerful idea.    

Little is known about the digital yuan except that it’s been in the works for five years and Beijing is nearly ready to roll. The consensus is that the token will be a private blockchain, a peer-to-peer network for sharing information and validating transactions, with the People’s Bank of China in control of who gets to participate. To begin with, the currency will be supplied via the banking system and replace some part of physical cash. That won’t be hard, given the ubiquitous presence of Chinese QR code-based digital wallets such as Alipay and WeChat Pay.

It may start small, but the digital yuan can disrupt both traditional banking and the post-Bretton Woods system of floating exchange rates that the world has lived with since 1973. No wonder that for China, “blockchain and the yuan digital currency are a national strategic priority — almost at the level of the internet,” says Sanford C. Bernstein & Co. fintech analyst Gautam Chhugani.  

Ever since the advent of the 17th-century goldsmith-banker in London, the most crucial thing in banking has been the ledger, a repository of irrefutable records to establish trust in situations where it doesn’t exist. When Peter in Vancouver agrees to send money to Paul in Singapore, they’re forced to use a chain of interlinked intermediaries because there’s no ledger in the world with both of them on it. Blockchain’s distributed ledgers make trust irrelevant. Paul devises a secret code, and shares its encrypted version with Peter, who uses it to create a digital contract to pay Paul. A cumbersome and expensive network of correspondent banks becomes redundant, especially when it comes to the $124 trillion businesses move across borders annually. Imagine the productivity boost; picture the threat to lenders.

China isn’t the only one experimenting. Fast, cheap cross-border payment settlement is one application of JPMorgan Chase & Co.’s Quorum, an Ethereum-based platform on which the Monetary Authority of Singapore is running Project Ubin, an exploration into central bank digital money. These are early days, but if blockchain technology shows promise in handling a large number of transactions simultaneously, then digital currencies could become substitutes not just for physical cash but also for bank reserves.

That’s when the game changes. Reserves at a central bank are maintained by deposit-taking lenders. A digital yuan — or Singapore dollar or Indian rupee — could bypass this system and allow any holder of the currency to have a deposit at the central bank, potentially making the state the monopoly supplier of money to retail customers. As Agustin Carstens, the general manager at the Bank for International Settlement, noted recently, “If the central bank becomes everybody’s deposit-taker, it may find itself becoming everybody’s lender too.”

But why would central banks want to demote their own banking systems? One answer, looking at Europe and Japan, is that negative interest rates are doing that anyway. Lenders are starved of profit because while the central bank charges them for keeping money on deposit, they can’t as easily pass on those negative interest rates to their own depositors. If the global economy gets mired in long-term stagnation, official digital currencies will at least be an efficient way of monetary easing without involving banks.

The other, more concrete, reason may be that technological progress is making the status quo untenable. It’s no coincidence that China hastened its national cryptocurrency after Facebook Inc. announced the Libra project, which was touted as an alternative dollar. Perhaps that was fanciful, and the Libra has hit a wall of regulatory concerns. But if they’re offered like Spotify gift cards at the local 7-Eleven, there will be demand for tokens that are acceptable across borders, stable in value against baskets of national currencies, and can be used in global trade and investing. Someone in Silicon Valley will eventually succeed, blowing away the fig leaf of monetary sovereignty in emerging markets in the process.

The changes won’t end with banking and monetary arrangements. Token transactions will be pseudonymous: If the central bank wants to see who’s spending where, it can. Anonymity disappears when cash does. While that will make life difficult for money launderers and terrorists, it could also become a tool to punish political activism. Meanwhile, currency as a foreign policy weapon loses some sting. Pariah states will covet a crypto they can access by circumventing banks that are terrified of flouting Western sanctions. As Harvard University economist Kenneth Rogoff notes, technology “is on the verge of disrupting America’s ability to leverage faith in its currency to pursue its broader national interests.”

A roller-coaster decade — not just for for banking and money but also for privacy and politics — may just be beginning.

https://www.bloomberg.com/opinion/articles/2019-12-29/china-has-edge-over-silicon-valley-to-end-banking-as-we-know-it

....


According to this, china sped up development of its national digital crypto currency after facebook announced its libra plans and could release it in 2020.

One of the things that made america great was it being a previous hotbed of innovations and futuristic progress.

Today lawmakers appear determined to ensure america does everything within its power to oppose and obstruct innovations like bitcoin/blockchain/crypto.

While china and europe does the opposite. And so perhaps this represents a small microcosm of the paradigm shift taking place.

I already stopped using the banking systems only due to the blockchain tech.
I loved being with bitcoins and hence I have minimized my local transactions with the banking sectors.
This makes me feel confortable with my money and also no one has track on my money anymore.

You did a great job buddy, it will surely improve the crypto economies in our countries we should use block chain because it is safer to use than keeping your money into banks. Till now I did not get any satisfying profit for storing my money in banks. Investing in crypto and storing in blockchain are then best steps we take about our money it gives profit for storing and ease for using at time of need.

[USBitcoinServices.Com]

So we think that China, the government with the most oppression in the world which spys on its Citizens through the usage of a points system and biometrics on a daily basis, is going to lead the way on digital currency adoption? Hell no, that's bullshit.

China wants to use this to spy on their people even further. The ONLY current way that people are able to skirt the governments eye is by using cash, but you can't do that if the country forces you to use, then they're going to continue to spy on the people. They're going to push cash out of the economy because you can't spy on cash but you can SPY on digital cash.

You are right, citizens shouldn't trust government coins like the one from China; Anything CENTRALIZED I not good for the people! it is only good for governments or any entities looking for power and control. But meanwhile, those projects will help others to realize about cryptos and decentralization to become stronger.

[Kimonoe]

So we think that China, the government with the most oppression in the world which spys on its Citizens through the usage of a points system and biometrics on a daily basis, is going to lead the way on digital currency adoption? Hell no, that's bullshit.

China wants to use this to spy on their people even further. The ONLY current way that people are able to skirt the governments eye is by using cash, but you can't do that if the country forces you to use, then they're going to continue to spy on the people. They're going to push cash out of the economy because you can't spy on cash but you can SPY on digital cash.

You are right, citizens shouldn't trust government coins like the one from China; Anything CENTRALIZED I not good for the people! it is only good for governments or any entities looking for power and control. But meanwhile, those projects will help others to realize about cryptos and decentralization to become stronger.

besides that with coins from the government, I think it's difficult to make a profit, because later it might be more stable than cryptocurrency. on the other hand, it seems that the government still considers primary control, they are difficult to move to a decentralized system

[n0ne]

So we think that China, the government with the most oppression in the world which spys on its Citizens through the usage of a points system and biometrics on a daily basis, is going to lead the way on digital currency adoption? Hell no, that's bullshit.

China wants to use this to spy on their people even further. The ONLY current way that people are able to skirt the governments eye is by using cash, but you can't do that if the country forces you to use, then they're going to continue to spy on the people. They're going to push cash out of the economy because you can't spy on cash but you can SPY on digital cash.

You are right, citizens shouldn't trust government coins like the one from China; Anything CENTRALIZED I not good for the people! it is only good for governments or any entities looking for power and control. But meanwhile, those projects will help others to realize about cryptos and decentralization to become stronger.

Just because it isn't good for the people and it benefits the government the citizens can't stand against it. Just to increase the usage of the cryptocurrency of the government it restricts the usage of bitcoin and other decentralized cryptocurrencies. Governments always look for profiting out of its people, now with cryptocurrencies more the usage more will be the revenue through taxes.

[jostorres]

Say goodbye to banking? You wish. That’s not going to happen, the bank is a medium through which the government of every country is able to control and monitor every money in the country. So, when these cryptocurrencies are created, as the post says, they will be issued out by the Central bank of the country. And the way I see it, the Central banks will be the ones in charge in creating it but they won’t be handing it out to the public directly just like they do with fiat.

Banks (not Central banks) will be the ones issuing out the crypto assets to their customers through their internet banking platform and mobile payment systems. It’s going to be completely different from the Bitcoin we know because it’s not going to be decentralized and it won’t have the same features as Bitcoin, except it will be fast.

[Twentyonepaylots]

In the classical sense, banking will change now. However, I do not think that the banks will disappear in an instant, because banks with such a large amount of money will find new ways. I think banks will transform into a new economy.

Well, an institution who have been in existence of hundreds of years now won't simply disappear or become obsolete. Banks as we know it learn to evolved as well, now we have on-line banking (obviously, you don't get to go to a physical bank to transact).

and now they have somewhat a new competitor which its crypto, but then again I doubt that they will simply step aside, they will learn how to play with this so called crypto and learn to adopt, simply as that.

I believe what he meant is banking being revolutionized to the point that it no longer resembles it past self. This could mean that banks are already incorporating technologies only known from bitcoin and cryptocurrencies. Which is really good in itself. Imagine banking running on blockchain technology. You can transact, get money, send, and withdraw everywhere, long as you have internet.

[Zemomtum]

Well, this ambition might take some time but that will be the end result eventually. It is better government of all cadre embrace the new innovation of digital payment and joins the race

[sedov1966]

In the classical sense, banking will change now. However, I do not think that the banks will disappear in an instant, because banks with such a large amount of money will find new ways. I think banks will transform into a new economy.

Well, an institution who have been in existence of hundreds of years now won't simply disappear or become obsolete. Banks as we know it learn to evolved as well, now we have on-line banking (obviously, you don't get to go to a physical bank to transact).

and now they have somewhat a new competitor which its crypto, but then again I doubt that they will simply step aside, they will learn how to play with this so called crypto and learn to adopt, simply as that.

I was just about to say the same.
Why do people think that banks are blind and won't notice the crypto?
While it has $200+ bils market cap at this point which is crazy.
You should understand that banks were all-in physical, then internet era came and there was only PayPal basically.
Well, PayPal didn't take over all the banks as you may noticed so draw your own conclusions

[lanos925]

I think that everything that is said on the news about China and America is done just in order to cause us certain emotions, so that we all think about China or America in a certain way. In fact, most of what is happening (really important things) - we will not find out about this, because this will not be discussed in the news.

[romeojasmin13]

Digital economy is upcoming trend. But CB's cryptocurrencies or digital currencies will still be centralized so they will not take the place of decentralized currency.

[abhiseshakana]

Say goodbye to banking? You wish. That’s not going to happen, the bank is a medium through which the government of every country is able to control and monitor every money in the country. So, when these cryptocurrencies are created, as the post says, they will be issued out by the Central bank of the country. And the way I see it, the Central banks will be the ones in charge in creating it but they won’t be handing it out to the public directly just like they do with fiat.

Banks (not Central banks) will be the ones issuing out the crypto assets to their customers through their internet banking platform and mobile payment systems. It’s going to be completely different from the Bitcoin we know because it’s not going to be decentralized and it won’t have the same features as Bitcoin, except it will be fast.

Means not goodbye, but only changes its appearance. There was a shift (adjustment) from conventional to digital. The point is the same that changes only the packaging. The product and system are the same, interest. Currency becomes cryptocurrency in the form of a stable coin. The swift system is modified by the blockchain technology cover.

In essence, the bank will do everything possible to maintain its existence (raiding the assets of the lower middle class for a group of people at the center of the pyramid). The only way to force a bank to change into a service-oriented institution is to stop saving at the bank or put your money in a bank safe deposit box to maintain the security of a lot of money. For those who have a little money to save time and for those who do not have money, try harder and don't borrow from the bank because it will only add to the problem. So we have to start from our mindset about banks so that conventional banks really become a sunset business.

Many people assume that banks are a healing drug, even though banks are a destroyer of the economic immunity of individuals, communities, and countries. The interest system provides the illusion of a lifestyle above ability, spurring the lifestyle of hedonism and triggering speculation for consumption not for investment, even though the future can only be predicted but sometimes the reality is far from expectations.

[kesmex]

Well, this ambition might take some time but that will be the end result eventually. It is better government of all cadre embrace the new innovation of digital payment and joins the race

some countries have done that, and banks from Germany have also been able to store Bitcoin, that's a good thing, maybe other European countries will also follow that, and I think the Bank will not end

[USBitcoinServices.Com]

Say goodbye to banking? You wish. That’s not going to happen, the bank is a medium through which the government of every country is able to control and monitor every money in the country. So, when these cryptocurrencies are created, as the post says, they will be issued out by the Central bank of the country. And the way I see it, the Central banks will be the ones in charge in creating it but they won’t be handing it out to the public directly just like they do with fiat.

Banks (not Central banks) will be the ones issuing out the crypto assets to their customers through their internet banking platform and mobile payment systems. It’s going to be completely different from the Bitcoin we know because it’s not going to be decentralized and it won’t have the same features as Bitcoin, except it will be fast.

Means not goodbye, but only changes its appearance. There was a shift (adjustment) from conventional to digital. The point is the same that changes only the packaging. The product and system are the same, interest. Currency becomes cryptocurrency in the form of a stable coin. The swift system is modified by the blockchain technology cover.

In essence, the bank will do everything possible to maintain its existence (raiding the assets of the lower middle class for a group of people at the center of the pyramid). The only way to force a bank to change into a service-oriented institution is to stop saving at the bank or put your money in a bank safe deposit box to maintain the security of a lot of money. For those who have a little money to save time and for those who do not have money, try harder and don't borrow from the bank because it will only add to the problem. So we have to start from our mindset about banks so that conventional banks really become a sunset business.

Many people assume that banks are a healing drug, even though banks are a destroyer of the economic immunity of individuals, communities, and countries. The interest system provides the illusion of a lifestyle above ability, spurring the lifestyle of hedonism and triggering speculation for consumption not for investment, even though the future can only be predicted but sometimes the reality is far from expectations.

Yes, many banks will do whatever they can in order to keep in business as a centralized entities, and as we know they will use XRP to provide nontechie people a financial service, a lot of people don't want to learn by themselves and are willing to pay someone to do their tx for them, so that is where banks will keep existing or coexisting with crypto.