Many people focused on the G7 summit and the decision to adopt a minimum global corporate tax. As discussed in the Liberal Markets articles, this decision will certainly affect the course of the stock exchanges, due to the reversal of the data for the digital technology giants, from the change of the tax regime. G7 though was not content with that.
The G7 decisions focus on two complementary objectives. The first is the issue of official and centrally controlled digital currencies. The second is to prevent the pursuit of cryptocurrencies, and in particular bitcoin, to replace currencies in international payment systems. So, the era of the digital euro, the digital dollar and the rest of the digital core government is approaching.
The four basic principles that will govern the new Central Bank Digital Currencies are:
- Digital currencies will be a tool for international digital payments and not a monetary policy tool.
- Central banks, such as the Fed and the ECB, have no plans to change the structure or operation of the global banking system.
- Central banks are not interested in making profits from transactions and payments that will be made through central digital currencies.
- Finally, the digital currencies that will be controlled and regulated by the central banks, will act as liquid assets, the transactions of which will be cleared securely, through central mechanisms that will offer security and a clearing guarantee.
The only objection raised to the adoption of central digital currencies comes from commercial banks. The digital currency will correspond to digital deposits that will be “kept” in the central banks. So, there is a direct competition between central banks and commercial banks.
The possibility of transferring digital deposits from commercial banks to central banks is real and should be studied, so that we do not end up with a complete overthrow of the banking system as we know it today.
As for the counterattack of the central banks and the G7 states, things are simple. The quiver of weapons available today to both governments and central banks has many and varied tools. From state tax control, to the refusal of banks to accept liquidation products from transactions in cryptocurrencies and from the nomenclature of all payments and settlements of commercial transactions in cryptocurrencies, to the prosecution of transactions that conceal the trafficking of black money.