Bank of England Closing Down Accounts of People, Analysts Call for Rejection of CBDCs -Monero, ZCash and Dash the Only Salvation

• Substantial increase in the user base, which expanded by an impressive 38% compared to the previous quarter.

• Q2 witnessed a notable shift in volume distribution, with “Other” decentralized exchanges (DEXs) accounting for 44% of the total volume.

During his speech on July 10, Andrew Bailey, a governor at the Bank of England (BOE), seamlessly transitioned from discussing the central bank’s endeavors to regulate inflation and uphold public confidence in financial institutions to expressing his viewpoint on cryptocurrencies’ lack of qualification as money. 

Bank of England Governor Andrew Bailey says inflation is likely to drop “markedly” this year and that the full impact of rate increases has yet to hit the economy https://t.co/kntdoEKYPr

— Bloomberg Economics (@economics) July 10, 2023

Rather than endorsing cryptocurrencies and stablecoins, he expressed a preference for “enhanced digital money” as a more favorable alternative. According to Bailey, the series of bank failures witnessed in the United States and Switzerland earlier this year highlighted concerns regarding the singleness of money and settlement finality. 

Without providing further details, Bailey asserted that cryptocurrencies and stablecoins do not meet the fundamental criteria of singleness and settlement finality, leading him to conclude that they cannot be considered money. However, Bailey suggested that the passage of the Financial Services and Markets Act would effectively align stablecoins with regulatory requirements.

Furthermore, Bailey stated that digital money, which currently exists solely within IT systems, can be enhanced by incorporating a broader range of executable actions. One example he provided was the inclusion of contingent actions within smart contracts. This advancement would enable digital money to function as a more versatile currency unit, accommodating various transactional possibilities.

Bailey expressed that a central bank digital currency (CBDC) would serve as another variant of enhanced digital money. He further emphasized that developing and implementing well-designed enhanced digital money should not be limited solely to central banks. However, Bailey highlighted that a CBDC would offer specific advantages, suggesting its unique characteristics and potential benefits.

Bailey held a contrasting perspective regarding wholesale central bank digital currencies (CBDCs). The Bank of England (BOE) recently enhanced its Real-Time Gross Settlement (RTGS) system. 

Bailey further stated. “ This puts us in a very strong position to deliver solutions integrating central bank digital money in RTGS with tokenized transactions. We think this is the fastest and most efficient route to take.”

Experts Advocate Against Adoption of CBDCs

John Reed Stark, a former official of the U.S. Securities and Exchange Commission (SEC) and currently the president of cybersecurity firm John Reed Stark Consulting, voiced strong criticism towards cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs) in an extensive tweet shared on Tuesday. 

The creation of a CBDC is perhaps the most absurd financial idea in the history of monetary policy.

First off, just like crypto and stablecoins, you must begin by answering the question of what problem does a CBDC actually solve. Why do we need a CBDC? There is no answer to that… pic.twitter.com/BNkM1gehZ9

— John Reed Stark (@JohnReedStark) July 4, 2023

Stark’s expertise in the field stems from his founding of the SEC Office of Internet Enforcement, where he served as chief for 11 years, as well as his previous role as an SEC enforcement attorney for 15 years.

He wrote,” The creation of a CBDC is perhaps the most absurd financial idea in the history of monetary policy.” Stark raised concerns regarding the potential risks associated with a central bank digital currency. He further said, “The risks of a CBDC remain myriad and raise a variety of important policy questions, including how a CIBC might affect financial sector market structure, the cost and availability of credit, the safety and stability of the financial system and the efficacy of monetary policy,” 

He concluded by saying, “The bottom line: The mammoth costs and challenges of creating a CBDC could not possibly be worth the risks and costs associated with having a CBDC.”

DASH

However, the race among numerous nations to adopt Central Bank Digital Currencies (CBDCs) has unexpectedly provided an advantageous situation for privacy coins. Within the crypto community, Monero (XMR), Dash (DASH), and ZCash (ZEC) have witnessed a substantial surge in popularity. 

The appeal of these privacy-focused cryptocurrencies lies in their capability to provide financial freedom combined with a strong emphasis on maintaining user anonymity. As a result, they have emerged as formidable competitors to CBDCs.

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