The respected economist Jeffrey Tucker urged governments to let go of the idea of creating Central Bank Digital Currencies (CBDC) and focus on the fiat and banking system. The editorial director at the American Institute for Economic Research (AEIR) published an article in which he says that the Fed should be focused entirely on the soundness of the dollar rather than in other virtual currencies.
Governments are now facing an increased competition from private actors in many different fields. In the past we had a central government, and just a few other private institutions. The system has been changing and the world has now a very active civil society and institutions that rival with governments and bind them.
The same has happened in the monetary field, we now have new actors, virtual currencies that do not depend on centralized authorities and that are controlled by a decentralized network all over the world. And yes, that’s an issue for governments.
Indeed, the European Central Bank (ECB) admits that saying that the international nature of cryptocurrency markets is a challenge to competition policy at the European level. For example, Estonia wanted to create its own virtual currency through an Initial Coin Offering (ICO), but the ECB answered that the only legal currency accepted in the Eurozone is the Euro and no other coin, neither fiat nor digital.
According to Mr. Tucker we are starting to see what real choice in currency might look like. He says that cryptocurrencies created by a central bank would not be genuine ‘cryptos.’ Virtual currencies have value because the market gives it to them, nobody imposed these cryptocurrencies to nobody.
Trucker explains his point of view as follows:
“I’m not a believer. They won’t compete in the marketplace. They might achieve the opposite of the stated goal – the end of monopoly. Truly rivalrous competition is just now starting to exist in a sector long monopolized by governments… Thanks to decentralized-ledger technology and some impressive innovations to create digital money and banking solutions – the technology operates peer-to-peer and requires neither government nor intermediaries to operate – we are beginning to see what real choice in currency might look like.”
The economist believes that if the private sector is innovating, governments and public agencies should live it alone. Additionally, he says that if the public sector did not participate innovating, then it shouldn’t be regulating it.
In the article he has also mentioned the Venezuelan Petro and why it was created. He explained that it is not a virtual currency, but instead, it is ‘an oil-backed debt instrument floated only to get around U.S. trade sanctions.”
At the moment, Iran may be trying to issue its own virtual currency in order to avoid international sanctions and the blockade imposed by the US government in the last times. Until now, there is no information on the matter but in the coming weeks we could have some news.