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If you have your ear on the track, as they say, listening for the oncoming train carrying a digital currency and tokenization of a fintech future, you better look up, because it's about to hit you.
Not only are America's dollar-dependent trading partners turning to digital currencies, the U.S.'s own Federal Reserve is openly "experimenting" with a CBDC, central bank digital currency, while fintech companies are pushing tokenization of core banking functions including repurchase agreements.
The heat is on because of breakthroughs in artificial intelligence tools, in particular natural language generative A.I. models like ChatGPT.
China rolled out a central bank issued digital currency in April 2020, in four major cities, Shenzhen, Suzhou, Xiongan, and Chengdu. The rollout continued in 2022 to include Beijing and Shanghai. It's estimated by Chinese authorities that almost a fifth of China's 1.4 billion people have set up a digital yuan wallet to be able to use the new currency.
The digital yuan, or e-yuan, or e-CNY, digital renminbi, or digital RMB isn't a cryptocurrency tied to a blockchain. It's a digital currency or token, if you like, issued by the People's Bank of China (PBOC) and valued the same as the standard renminbi (RMB). It is a legal tender digitized version of the physical RMB that can be used in transactions the PBOC claims are "faster, cheaper, and theoretically more secure."
Transactions are completed instantaneously and at lower costs because intermediaries, namely banks, aren't needed to participate in those exchanges. Security is supposedly enhanced by a "variety of technologies, including a digital certificate system, digital signature, and encrypted storage which makes double spending, illegal duplication and counterfeiting, transaction falsification, and repudiation unfeasible," according to a PBOC White Paper.
More importantly than a digital yuan, the Hong Kong Monetary Authority is pushing a multiple central bank digital currency bridge project, called mBridge or mCBDC bridge project. The mBridge's purpose is the establishment of a multilateral system that can accommodate different digital currencies and legal regulations. The project includes China, Hong Kong, Thailand, United Arab Emirates, and most importantly by a wide margin, the Bank of International Settlements, BIS, the so-called central bank of the world's central banks.
If the inclusion of the BIS in the mBridge project isn't a spotlight on a digital currency future, nothing is.
China's also part of the bloc of nations known as the BRICS, Brazil, Russia, India, China, and South Africa, which as of the last BRICS meeting two weeks ago in Johannesburg, South Africa, may include new invitees Iran, Saudi Arabia, Ethiopia, Egypt, Argentina, and the United Arab Emirates, are looking into the creation of a cryptocurrency, possibly backed by gold, as a new international payments regime.
Recognizing the oncoming push into digital currencies, especially central bank-backed, even cryptocurrency-blockchain based alternatives now challenging established dollar-denominated payments systems, America's central bank the Federal Reserve has been "experimenting" in the space.
On their website the Fed says they are "studying how a CBDC could improve an already safe and efficient U.S.…
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About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.