Co-founder of Decred: CBDC will facilitate the growth of crony capitalism

Co-founder of Decred: CBDC will facilitate the growth of crony capitalism

admin 28. Juni 2020

Decred co-founder Jake Yocom-Piatt believes that the emergence of Bitcoin Rejoin will facilitate the growth of clientelist or crony capitalism. He speculates that if they are successful, central banks will not need intermediaries, allowing them to create favoritism.

Nominally responsible
In an interview with Cointelegraph, Yacom-Piatt said that the way in which the banking system is currently configured, if the Fed wants to give a loan to a company or industry, it will not be able to do so directly. Instead, it must first make a loan to a commercial bank, which will then lend these funds. This creates at least some level of transparency and accountability:

„So that’s a process that is at least nominally accountable in the sense that you can see how much credit the central bank gives to a commercial bank. And if they were lying about it, it would be like a massive scandal.

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Favouritism when giving credits
Yacom-Piatt believes that this could lead to central banks believing they are God. He says they could arbitrarily give loans without any checks and balances that would essentially facilitate client capitalism:

„They could launch CBDCs and then, well, you know what, start giving credit to people they like in specific industries who think they need credit. So it could make the problem much worse with central banks by increasing opacity.

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Asymmetrical information?
Yacom-Piatt argues that the issuance of CBDCs will not create greater transparency. Instead, he says it will generate an even greater asymmetry of information than the government will be able to capitalize on:

„If a central bank really wanted to do this, the amount of opacity they could create for themselves and at the same time extract privacy from everyone else is ridiculous, so they could do whatever they wanted, literally.“

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Industry experts have been speculating for some time that the Chinese government’s main motivation for issuing the digital yuan is the desire to exude even greater control over the country’s financial system. While this may seem contradictory at first, the technology is only a tool that can be applied according to the goals of its users.