PBOC Exploring Digital Currency and allowing consumers to have accounts with Central Bank

CMR Editor

It is now apparent that the traditional banking system is like the
former telecom monopolies in the States. They are big, bureaucratic
slothful like institutions who literally live by sucking the prosperity
of society.

The over-gorged New York City and London elite take your money, pay you
no interest, then print money based off of your deposit.(fractional
reserve banking system) In addition to that they have a license to receive
money at near zero interest from the private Central Bank (The Fed) that
they own and then buy up government debt shackling the very governments
with debt that gave them the right to print the funds in the first place.

All of this fictionally created cash then washes into the market to compete
with normal investors in buying stocks, commodities, and other assets.
Prices and bubbles get created with so much new freely printed currency.
Normal people then have to imprison themselves with life-long debt to purchase
a house or pay for college tuition as costs explode all the while the Fed
themselves tell you there is no inflation. When the gambles on currencies and
commodities go bad as they do every decade or so…no problem,print more money
and expand the Fed balance sheet and devalue your life-long earned savings.

More supply of dollars equals less value, its simple supply and demand.

Now, there is a light at then end of the tunnel in this banker induced serfdom
for people around the global. Digital currencies and Fintech are threatening
the very existence of this 19th century banking infrastructure. Some Fintech
company will become the Amazon that blows up the retail sector or the Netflix
that blows up Blockbuster or even the Skype type company that blew up the
long-distance telephone scam on American consumers. Big Banking brands may not
be around in twenty years as they fail to cope with the digital challenge in
banking.

The Chinese banking system on the other hand has been nationalized and held into
strict types of businesses,by law not allowed to invest in exotic financial
products. And if you put your cash into a Chinese savings account, you actually
receive interest,at current rates about 4%.

Recently, an article has appeared showing the the PBOC is exploring digital
currencies and even the idea of allowing citizens to set up accounts with the
PBOC directly.Combined with Fintech companies such as Ant Financial will allow
frictionless, low cost banking to proliferate across the globe.

The original Chinese article (http://mp.weixin.qq.com/s/H0wDjzUL2Nn6mU42e2Dk8Q)
is written by YAO Qian of the Technology Department of People’s Bank of China
(PBOC).

This article discusses the relationship between digital currency and bank
account and proposes a design concept where bank accounts and digital currency
wallets coexist and operate at different layers. This article also demonstrates
a use case of earmarked subsidy distribution and suggests focus areas for further
studies.

It says,digital currency can leverage existing IT infrastructure with a variety
of applications and services, the costs of promoting digital currency would be
significantly reduced and its usage would be more convenient and flexible,
which would facilitate the wide adoption of digital currency by the public.
In addition, the incorporation of digital currency into existing applications
would generate more diversified scenarios, which would in turn contribute to
greater competitiveness of digital currency and enable it to provide better
services.

The most straightforward way to leverage the bank account system is to expand
the scope of central bank’s balance sheet. In fact, claims on central bank of
commercial banks and other financial institutions in the form of central bank
deposits have already been digitized. However, should the central bank provide
such services to broader counterparties? Should non-financial institutions such
as households be allowed to open accounts at the central bank?

If that happens, the middleman standing in the way of people and credit creation
will disappear.If you own a Lamborghini dealership in NYC it may be time to sell.

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