Are state digital cryptocurrencies coming?

Significant changes coming soon from the upcoming cryptocurrency market in the banking sector.

The large auditing company Ernst & Young is preparing the banks for the large inflow of digital government currencies.

In particular, R&D, through its Global Regulatory Review 2022 report, R&D advised commercial and financial institutions to start preparing for the massive entry of stablecoin and government currencies (CBDCs) into the market.

EY auditors write that it is time for financial services companies to change their policies to overcome the effects of digital asset proliferation.

 It's time for banks to act now to retain their customers.

"If customers trust the savings directly to central banks thanks to digital government currencies, they will not need commercial banks. "The income and margins of financial institutions will be significantly reduced," said the authors of the Ernst & Young report.

The audit firm advises banks to work more closely with regional and national regulators.

Government cryptocurrencies can not only supplement but even wholly replace fiat currency.

 Therefore, bankers should investigate in advance the possibility of their adoption.

What is Fiat?

Documentary money (fiat money) or otherwise forced circulation money is the means of payment that is not covered by a reserve of other materials (e.g., gold) and therefore lacks some intrinsic value even indirectly.

Gold price history in 1960–2020.

As of September 2017, gold is valued at around $42 per gram ($1,300 per troy ounce).

Like other precious metals, gold is measured by troy weight and grams. The alloy's gold proportion is measured by karat (k), with 24 karats (24k) being pure gold and lower karat numbers proportionally less.

 The purity of a gold bar or coin can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995 being nearly pure. 

The price of gold is determined through trading in the gold and derivatives markets. Still, a procedure known as the Gold Fixing in London, originating in September 1919, provides a daily benchmark price to the industry. The afternoon fixing was introduced in 1968 to provide a price when US markets are open.

It is imposed on transactions by an authority (usually the state) in payments and receipts.

It is expressed in a monetary unit and usually in banknotes and coins, which may have a face value equal to multiples or multiples.

Paper money is called documentary money because its use (and value) as money depends on the credit of the issuing government and not on any right to convert it into coins.

More specifically, the documentary money is ultimately released from the number of precious metals. But it has value as a means of trading when some primary conditions are met, such as [pending referral] the constant lending of money by the Central Banks. 

The amount of money put into circulation must be consistent and follow economic growth and consider other economic variables such as, for example, inflation.

Recognition as a means of payment is guaranteed and imposed by the state.

 This enforcement today is usually done by law.

Finally, its purchasing power must be stable. 

Its legalization in transactions only makes sense because it can be converted into desirable goods and financial products produced and offered by the country where the currency in question circulates.

Our articles are for informational purposes only and do not replace specialized consulting services with professional experts. 

And some music ( Gold Lovers).

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