Are the banks preparing to use Blockchain technology to get rid of cash?

It has been a few years since J.P. Morgan’s commodity head Blythe Masters was ‘let go’ from the bank in 2014, only to resurface as the head of a new digital finance company focused on Blockchain technology.  And while there have been many startups around the world creating their own blockchain innovations, many of which are centered around Bitcoin and other crypto-currencies, one has to wonder what agenda Blythe Masters intends for the technology in her new company.

The reason this question is important is because a new report came out on May 2 of a secret meeting between 100 financial executives where blockchain technology was used to create a Larry Summers frankenstein…

Purely digital dollars.

On a recent Monday in April, more than 100 executives from some of the world’s largest financial institutions gathered for a private meeting at the Times Square office of Nasdaq Inc. They weren’t there to just talk about blockchain, the new technology some predict will transform finance, but to build and experiment with the software.

By the end of the day, they had seen something revolutionary: U.S. dollars transformed into pure digital assets, able to be used to execute and settle a trade instantly. That’s the promise of a blockchain, where the cumbersome and error-prone system that takes days to move money across town or around the world is replaced with almost instant certainty. The event was created by Chain, one of many startups trying to rewire the financial industry, with representatives from Nasdaq, Citigroup Inc., Visa Inc., Fidelity, Fiserv Inc., Pfizer Inc. and others in the room.

The event — announced in a statement this Monday — marked a key moment in the evolution of blockchain, notable both for what was achieved, as well as how many firms were involved. The technology’s potential has captivated Wall Street executives because it offers a way to free up billions of dollars by speeding transactions that currently can take days, tying up capital. But a huge piece of that puzzle is transforming cash into a digital form. And while some firms have conducted experiments, the Chain event showed a large number of them are now looking jointly at a potential solution.

“We created a digital dollar” to show the group at Nasdaq an instant debit and credit on a blockchain, said Marc West, chief technology officer at Fiserv, a transaction and payments company with more than 13,000 clients across the financial industry. “This is the first time the money has moved.”

— Bloomberg

Ending physical cash and moving money into a purely digital construct is the maniacal dream of dozens of central banks who have now found themselves forced into policies of negative interest rates.  And as basic human nature is proving out in places like Austria and Japan, anytime depositors have the power to remove their money from a banking system, the power of negative interest rates becomes moot without the use of capital controls, and a banning of physical cash.

There are many signs that Western banks are desperate to control all outflows of cash, especially when just this weekend Charles Schwab informed customers they were cutting off money market accounts in favor of storing customer cash in U.S. Treasuries.  And in addition, Interactive Brokers on Sunday announced they were imposing negative interest rates on all Yen based accounts they manage.

Lack of liquidity was the real underlying factor in the 2008 financial collapse, and as the world divests themselves from dollar denominated assets in increasing numbers, this same fear is causing governments and central banks to reach for new draconian ways to keep their corrupt systems afloat.

And it appears that banks are now racing against the clock to try to bring online a blockchain based system that will accommodate the end of cash, and force the world into a completely digital currency of their making.

7 comments

  1. So basically nothing can stop them here in the west. Are the Brics involved with this? If they are involved with ‘London’?

  2. They must have some scheme to keep this new currency from being convertible to regular bitcoin, plus some idea of forbidding purchases of gold or silver with it. It will be difficult to prevent a black market from springing up of people who use sites like Ebay for selling things bought in banker based digital currency for coins or other stores of value. These people are so full of themselves, they’ll make a lot of trouble for people, but an end run around them will still happen.

  3. They are all going to die along with their schemes. Gold and silver for the win. If you buy $50,000 in silver today it will be worth several million in this new glockchain currency in just a few years.

  4. They’re missing the point and fundamentals of Bitcoin and the Open Source & Distributed model it brings. Taking and old ugly pig (Central BankingClosed Systems) and slapping lipstick ("Blockchain Technology") into the mix still provides the same outcome, a old ugly pig with lipstick.

    If the network effect of Bitcoin can hasten as as these policies are forced down to the throat of the masses, this will flop on their face spectacularly. I can only affirm for myself, but still speculate and can’t imagine that if people have a choice of, Central Bank Digital Currency with the counter risk of negative interest rates (stealing of your money just because you don’t spend it right away!) or Decentralized Open Cryptocurrencies, that the outcome is NOT going to be positive for the Central Banking model.

    The question is how many sheeple can awake AND be open minded AND proactive enough to stretch out that good ol brain muscle to do a bit of research to alternative competing currencies like Bitcoin/Cryptocurrencies or even traditional alternate methods like gold & silver.

    It’s worth noting that those who bash on Bitcoin (yes it’s a digital currency), do so with the least bit of knowledge about the protocol. They usually are the folks who have never read the open source code, and thus have not confirmed what it’s monetary policies are (witch are written on the code; projected inflation rate to the year 2140, total supply to come into existance, etc.). These are also the folks that are not in the community, do not have a thorough (or even mediocare) understanding of the underlying technology.

    I see this happening a lot from the "Gold Bugs" (this post is coming from one of many years). I saw this amazing admission by no 3 greater "gold bugs" like Jim Rickards, Andy Hoffman (owns Bitcoin) and Michael Maloney who started off bashing on Bitcoin when first being asked about it, things like "instrisic value" who I hope all reading this blog can understand is simply a perception of the value a specific individual places on a certain thing or item and this differs from person to person. Yet, these same men but just a few years later (as these are open minded and are heavy researchers and well educated), they too came to recognize the value of Bitcoin, with Andy Hoffman owning some (out of all people!).

    — A Gold Bug

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