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Is Inflation on the Table with Central-bank digital currencies?

Is Inflation on the Table with Central-bank digital currencies?
  • A post by BitMEX Research was released earlier this week on the 18th of March which looks into the many approaches that governments can take in regards to issuing central-bank digital currencies.
  • As it stands, the modern economy and money supply is primarily determined by the ability by banks to make loans.

A post by BitMEX Research was released earlier this week on the 18th of March which looks into the many approaches that governments can take in regards to issuing central-bank digital currencies.

As it stands, the modern economy and money supply is primarily determined by the ability by banks to make loans.

The post further says:

“From a liquidity perspective, the largest deposit-taking institutions in an economy have an almost unconstrained capability to create new loans, since the funds loaned out will automatically get placed back into their own bank as a deposit.”

Despite this, the release from the platform didn’t mention anything on the 15th of March that the Federal reserve abolished reserve requirements that have been in place for decades to help avoid bank runs. Even though banks have the ability to create an infinite supply of money in theory, it is unlikely to happen in practice.

According to the CEO and founder of Celsius Network, Alex Mashinsky:

“Based on new rules, they can go to the Fed and borrow as much money as they want. 1.5 Trillion permanent repo. But there is no liquidity in the market, they don't trust each other.”

It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!

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