If you haven't heard of mBridge before then let me give you a quick recap on it. mBridge is a multi-CBDC and honestly the first of it's kind that does cross boarder payments and foreign exchange transactions using CBDCs. The primary countries involved with this are China, Thailand, Hong Kong and UAE.

The idea of this system is to no longer be reliant on USD currency to be able to do transactions. This will lower transaction fees and costs as well as making payments far faster then using the now old outdated USD system.

There's also a so called "test net" which has also been released now to IMF and the World Bank showing that this is a serious system that is being implemented that they are looking to create the new standard in.

Development Of CBDCs

Now while there's been a lot of headwind about CBDCs it's pretty clear now they are going to become a new standard around the world. With 134 countries and currency unions that represents 98% of the worlds GDP. Now these are not established CBDCs but they are in some type of phase of looking into it. The image below breaks that down.

3 Launched
36 Pilot
30 Development (USA included in this one)
44 Researching

What's really wild about this is that some of the heavy hitters are actully using Ethereum's Solidity smart contract language and the EVMs.

The Pros and Cons

Living outside of the USA a CBDC is actully a very beneficial thing for you. It could very well allow people outside of the banking system a way to actully have a digital style bank and greatly reduce transaction costs.

Trying to transact money to someone from the USA to say Africa could result in massive fees and massive oversight. While I could do the same thing in crypto right now for pennies and in some cases feeless! It's also instantly sent to them to use.

The negative side of this in the USA is the possibility it could fragment the global economy and threaten the USD dollar. That would have drastic effects on the USA being a global super power and that's mainly because of the huge amounts of massive debt it now has with less and less people and countries wanting to take on that debt.

It basically comes down to exporting the USD around the world as to why the USD still holds solid value and is looked to all over the world.

The Fed

The Fed is expected to cut rates at least once this year. This also has an effect on inflation and the demand for such a system.

This is mainly because the USA prints money like crazy but it's able to reduce that inflation down by using it around the world. What happens when there are competing options with lower fees? Well that less USD being used which in turn makes it harder and harder to reduce the inflation rate. This could result in high inflation in the USA for years to come that simply never returns to that 2% target and it's what many are now expecting to happen.

The Expiration Date

Now with the mBridge system whoever is in control of it (because it's not decentralized at all) means they have control over it. It empowers that country or countries that control it. It allows them to set rates, fees and even expiration dates. Think that's wild? Well China has already done such a thing. Either spend that money or lose it.

Now in a way for that country it's a good thing. For the person though it's a horrible thing and really limits what you can and can't do with your money.

A recession or a depression has people hording money however with a expiration date on that said money it forces people to go out and borrow and spend that money which stimulates the economy and brings it out of the said recession.

Privacy

One of the great benefits of crypto and even to some extend the USD is the right to financial privacy. While it's not the greatest for the USD it's still better than a lot of other countries.

This is a core reason now why the USA doesn't want any part in the CBDC. As a centrally controlled CBDC allows that government to fully track and do whatever they want with that currency. In short kiss the "free" world goodbye. And yes I know there will be some people that say but we are not really free. But I'd have to say it's at least a little better then a government telling you how much money you can have, when you have to spend it by and what fees you have to pay on that transaction including fully tracking every penny you spend and sending you a You owe us paper at tax time which calculates all of this automatically.

This puts major risk that any one country or entity can now say what you can or cant transact with your money and total oversight. If you ever wanted a dictatorship of money the CBDC would be just that.

Do you feel mBridge will overtake the world? Or will people understand the risks before it's too late?

What is happening for sure though is we are right now this very day witnessing a real challenge to how the financial system has worked now for the last 50+ years.

Posted Using InLeo Alpha