Some time ago the media spread information that the Chinese authorities are working on their digital currency. Now it turns out that Hong Kong is considering a similar project.
The Chinese digital currency – according to information provided by the local authorities – is to be the decisive response of the Middle Kingdom to Facebook Libra. Therefore, it would be in line with the trend of creating digital currencies by nation-states or state associations. Recently, there have also been the first reports that the financial elite of the European Union are also thinking about Eurocoin.
Hong Kong and its own digital currency
Now, in turn, the topic of Hong Kong’s digital currency appears. The information was provided by the Hong Kong Monetary Authority (HKMA), which acts as the central bank. Apparently, the institution is studying this topic and will provide conclusions soon, as early as in the first quarter of 2020.
This should not surprise anyone, bitcoin dice cooperates in this field in consultation with the authorities of mainland China. According to the information, the commission has signed a cooperation agreement with a subsidiary of the Institute of Digital Currency at the People’s Bank of China. If everything goes as planned, the Central Bank of the Middle Kingdom may be one of the first (not counting a failed experiment withPetro in Venezuela) to issue its own digital currency.
Currency not for retailers
However, which may upset fans of this type of payment, HKMA wants to design a new system so that it does not serve retail customers, but is only dedicated to domestic interbank payments, corporate wholesale payments and a “payment delivery” mechanism. In general, the idea is rather similar to JPM Coin, the JP Morgan coin. The project is to serve institutional clients and not necessarily citizens. At least at the beginning.
HMKA also signed a memorandum of understanding with the Bank of Thailand. In turn, the goal of this cooperation will be cooperation at the level of value exchange using digital currency.
But what is a Repurchase Agreement (Repo)?
According to the Investopedia definition:
“A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price. That small difference in price is the implicit overnight interest rate. Repos are typically used to raise short-term capital.”
Repos are a tool that central banks use to increase the liquidity for financial institutions to keep the money flow moving when this is needed.
However, all this increase in the money supply increases the buying power and a result the good prices go higher.
All this paper money created from thin air from the bankers should raise more concerns about Fiat money. What if the system is inflated to the point that the Fiat monetary scheme implodes and we are back to the gold standard as a central bank has hinted.
All these inflationary monetary policies that keep stealing money from the people pocket need a fix. Bitcoin fixes this and when you think that nearly the equivalent of the bitcoin market is injected daily in the markets, this puts things into perspective.
Even after 11 years, bitcoin is still at the beginning and people have not seen yet its true potential.