CBDCs, Are They Going to Ship?

A CBDC would be based on blockchain technology used by speculative cryptocurrencies such as Bitcoin. It would be issued by the Bank of England and would be backed by Sterling. A decision on whether to push ahead with Brit Coin will likely made around the decade. If the project does proceed, the CBDC could launch around 2030.

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Episode notes

Hosts: Ansel Lindner and Christian Keroles

Fed Watch is a macro podcast with a clear contrarian thesis of a deflationary breakdown of the financial system leading to bitcoin adoption. We question narratives and schools of thought, and try to form new understanding. Each episode we use current events to question mainstream and bitcoin narratives across the globe, with an emphasis on central banks and currencies.

In this episode, we discuss niche economic data from the Federal Reserve called the Senior Loan Officer Opinion Survey or SLOOS report. Then our conversation turns to the UK’s attempts to build a Central Bank Digital Currency (CBDC) which they have dubbed “Britcoin”.

The SLOOS data shows lending practices and state of the market according to a very broad survey of banks, mainly in the US but it does include some foreign banks. January’s data was categorically bad news.

There are two sides to a lending market, the lender and the borrower. Then the survey breaks it into two broad types of loans, business and households, and then further into two more components for each of those sub-types, commercial and industrial (C&I) and commercial real estate for business, and consumer real estate and consumer loans for households.

Almost every component was worse in January. Lending standards by banks tightened nearly across the board, and demand for loans fell in each.

This is a bad sign because, as we discuss a lot on the show, lending is where money is actually printed. If lending (AKA credit creation) is slowing rapidly, that puts immediate deflationary pressure on the economy.

Next we look at the UK’s attempt to build a CBDC. At this stage, their attempts remain confined to convincing people there is an actual need for a CBDC. Despite the fear-mongering rhetoric from many quarters, they are about as far away from a CBDC launch as they’ve always been.

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