Giving quotes to the press about blockchain and cryptocurrency is always an interesting experience. You never know how your words are going to be used.

I was asked to comment about central bank digital currencies (again)... You can see my recent articles on STEEM about CBDC's here and here. It seems people can't get enough of this hot topic and, I guess, I'm one of the few people who will go on the record and say what to me seems obvious.

Let me be clear:

Central bank digital currencies are a game-changer for the global financial system.

Image taken from the article "Central bank digital currency and the future of monetary policy"

Those central banks that get out ahead of this innovation are going to be able to seriously disrupt the Bretton Woods' legacy status of the US dollar as strong international reserve asset. It won't happen overnight, but for most countries that aren't the United States, what other choice do they have?

In response to an inquiry from a CCN reporter with this prompt:

The potential use of blockchain technology as a means to bypass the current global financial orthodoxy, especially the adoption of such by major powers that are hostile to a US-dominated global economic landscape (China, Russia, etc.)

Since this topic has long been within the boundaries of my academic discipline, I was excited to provide this long-winded response:

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In the twilight of World War Two, the US single-handedly fashioned the Bretton Woods System for its own benefit. And why not? They were, after all, the great victors of WWII on two separate fronts. Didn't they deserve it? The argument goes that whatever system they fashioned was certainly a better alternative to the hyperinflation of Weimar Germany. Although many people argue, including quite a few bitcoiners, that the Bretton Woods system collapsed at the exact point in time of the "Nixon Shock" in 1971 that suspended the convertibility of the US dollar into gold, in fact the vestiges of the Bretton Woods system remain in the form of the Bretton Woods "sister organizations" - World Bank, IMF, WTO - that still exert a tremendous influence on global finance.

The influence of these bodies on the existing international financial system is what has led China to develop a rather dexterous approach to combating the residue of dollar hegemony that lives on through these legacy Bretton Woods institutions. The establishment of the Asian Infrastructure Investment Bank (AIIB) and the BRICS’ New Development Bank (NDB), as well as the myriad gradualist steps that coerced the IMF to include the renminbi into its special drawing rights (SDR) portfolio are all part of China’s “heads we win, tails we don’t lose too much” monetary policy approach.

Now we can add to that list the PBoC's latest innovation - the DCEP, a "digital currency for electronic payment" intended to increase the velocity of payments throughout China's enormous digital economy. The result would, hopefully, be to begin to alleviate the need for the Chinese economy to absorb so much new supply of renminbi currency every year. In this regard, the efficiency and speed of blockchain payments may serve to stabilize the entire Chinese economy, thus preserving it as a viable alternative model for emerging markets to follow. The monetary morass we are currently seeing unfold in Argentina is certainly a good reason to preserve an alternative to US-led development in the 3rd World.

Might Europe soon be next? Many think that Europe's unexpected support for the AIIB indicates their understanding of the international monetary landscape. There are many reasons for countries outside of China to want to preserve the PRC as a critical component in a future multipolar financial order.

Perhaps the recent central bank digital currency (CBDC) announcement will delay the onset of a Chinese debt crisis for long enough to allow the development of these alternative institutions and all that is involved with crafting an alternative regional ecosystem like the One Belt One Road initiative.

Will other countries in the same boat follow the lead of Xi Jinping, Li Keqiang, Zhou Xiaochuan and other Chinese leaders? Often times, the Communist Party elites do not work in tandem with one another, much less other countries. Nevertheless, over the long run, they have shown an ability to display the leadership acumen and political skill to have succeeded in establishing the People’s Republic of China (PRC) as the second most important driver of world stock markets outside of the Federal Reserve.

Now when China sneezes, the whole world catches a cold. You wouldn't have said that a decade ago.

Being an innovator in blockchain technology, in particular its application to government monetary policy, will likely prove to be a further means of embedding China's economy, and by extension its central bank, more firmly into the global financial system. Just like its trade war rival, the United States, has enjoyed since the end of WWII.

Interestingly, the above text got quoted in an article Ordinary Cubans Embrace Cryptocurrency to Bypass Crippling Sanctions. I did not know that! But it certainly jives with Michael Creadon and I's shared hypothesis that bitcoin and digital assets are more useful in emerging markets.

Here's how I got quoted:

[@shanghaipreneur] told CCN that Beijing's motivation in launching its central bank digital currency may be to “delay the onset of a Chinese debt crisis for long enough” to allow alternative economic institutions such as the BRICS’ New Development Bank to develop.

All of that text and this is what the author chose!

Oh well, you know what they say.

All press is good press.