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The CBDC will promote the growth of crony capitalism

June 17, 2020

The co-founder of Decred (DCR), Jake Yocom-Piatt believes that The emergence of CBDCs will promote the growth of customer or crony capitalism. He speculates that if central banks succeed, they will not need intermediaries to enable them to operate favoritism.

Nominally responsible

In a Cointelegraph interview Yacom-Piatt said that the way the banking system is currently configured If the Fed wants to lend to a company or industry, it cannot do so directly. Instead, You have to first give a loan to a commercial bank, Then who will lend these funds. This creates at least some degree of transparency and accountability:

“So this is a process that is at least nominally responsible, because you can see how much credit the central bank grants to a commercial bank. And if they were lying about it, it would be like a massive scandal.”

Favoriteism in awarding credits

Yacom-Piatt believes that This could lead to the central banks creating themselves as God. Says they could Give loans arbitrarily without checks and balances that would essentially facilitate customer capitalism:

“You could start CBDCs and then, you know what, start lending to people who like them in certain industries and who think they need credit. This could compound the problem with central banks by increasing opacity. “

Asymmetric information?

The CBDC will promote the growth of crony capitalismThe CBDC will promote the growth of crony capitalism

Yacom-Piatt argues that issuing CBDCs will not create greater transparency. Instead, it says it will generate one even greater asymmetry of information from which the government can capitalize:

“If a central bank really wanted to do this, the amount of opacity it can create for itself while extracting everyone else’s privacy is ridiculous so they can literally do what they want.”

Industry experts have speculated For a time when the Chinese government’s main motivation for spending the digital yuan is Desire for even greater control over the country’s financial system. Although this may seem contradictory at first, technology is just a tool that can be used. according to the goals of its users.