"The future is here. So say a report by the Monetary Authority of Singapore (MAS), which in collaboration with a number of banks and blockchain technology firms recently announced that phase one of tokenizing Singaporean Dollars through an ethereum blockchain has successfully completed."
Hi friends,
This, I think, is fantastic news.
The tokenization of central bank fiat funds would mean we wouldn't have to relay on commercial banks for simple transactions.
Worldwide, 95% of "money" in use is created by commercial banks when they issue a loan, in the form of electronic money. Only 5% is paper money issued by central banks.
This is bad for the following reasons:
It gives commercial banks way to much power in deciding when money gets created, to whom and for what it gets issued, and under what terms.
It creates instability. It contributes to the creation and popping of bubbles -- When economies are hot and inflation is on the rise, commercial banks lend more freely, contributing more money to the system, thereby increasing the rate of inflation. When the housing market is hot, for example, it is easy to get a loan, making it more likely buyers will overpay and sellers increase prices. The opposite occurs, too: commercial banks withhold money and make it hoarder to borrow in bust cycles, exactly when people need it most. This policy can create deflationary pressure, exacerbating the and prolonging bear markets.
It worsens inequality. We all know that if you have money, you can get money easily and cheaply. So, the rich have access to loans at the best rates. The opposite is true, too: People with little money have to pay a lot more to get much smaller loans. Those with no credit (they may live in an economy where work is informal) cannot get money at all often. (See my post https://steemit.com/money/@mwanacomete/cruel-irony-in-the-fight-against-terrorism for a deeper look, à la the World Bank, into how people who most need money are often the ones who can't get it.)
Central banks, usually having the health of the economies of their home countries' as their primary interest, would be able to take a greater money-creating role.
This doesn't mean that bankless currencies should cease to exist. The MAS tokenizing the Singapore dollar via the Ethereum blockchain gives value to ETH.
What are your thoughts?
Link to full story: http://www.trustnodes.com/2017/06/07/singaporean-dollar-tokenized-ethereums-blockchain-monetary-authority-singapore
Bye for now!